Financial Accounting ICOM Part 01 Top 500 + MCQS Download Pdf Chapter No 06

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Chapter – 6

Accounting for Bill of Exchange

Encircle the most appropriate answer from the following four answers

1. A bill of exchange is a method of payment on:

  1. Cash basis
  2. Credit basis
  3. Accommodation basis
  4. Reserve basis

2. A bill of exchange is defined under Bills of exchange Act:

  1. 1982
  2. 1882
  3. 1906
  4. 1932

3. A bill of exchange is an:

  1. Unconditional order
  2. A Request
  3. A Promise
  4. Conditional order

4. A person who writes out the order to pay is called:

  1. Acceptor
  2. Drawee
  3. Payee
  4. Drawer

5.A person who is ordered to pay is called:

  1. Drawer
  2. Endorsee
  3. Drawee
  4. Creditor

6.When a drawer discounts the bill, he gets:

  1. More than face value
  2. None of these
  3. Less than face value
  4. Equal to face value

7.It is a period of time after which a bill becomes payable:

  1. Grace days
  2. Tenor
  3. Maturity
  4. Usance

8. The bills become payable at any time when they are presented by the holder are called:

Accommodation bills

Trade bills

Term bills

Demand bills

9.In case of term bill extra three days are given to acceptor are called:

  1. Days of grace
  2. Days of Bill receivable
  3. Day of tenor
  4. Days of bill of exchange

10. A bill of exchange is drawn by:

  1. Creditor
  2. Endorsee
  3. Debtor
  4. Endorser

11. If drawer is in need of money and cannot wait tilI due date and receive the money from bank it will be:

  1. Retirement of bill
  2. Discounting of bill
  3. Endorsement of bill.
  4. Dishonor of bill.

12. When a drawer transfers a bill to his creditor for settlement of his own debts is called:

  1. Retirement of bill
  2. Endorsement of bill
  3. Discounting of bill
  4. Settlement of bill

13.when a drawee honours his acceptance he will be credited:

  1. Capital account
  2. Bill payable account
  3. Drawer account
  4. Cash account

14. How many parties are involved in case of discounting of bill:

  1. Two
  2. Four
  3. Three
  4. None of these

15. When a drawer discounts a bill, he debits:

  1. Bank account
  2. Drawee account
  3. Interest account
  4. Bill receivable account

16.The person to whom the bill is transferred will become:

  1. Endorser
  2. Debtor
  3. Creditor
  4. Endorsee

17.When a bill is endorsed, then the endorser has:

  1. Current liability
  2. Contingent Liability
  3. Fixed liability
  4. None of those

18. A bill from the point of view of a debtor is called:

  1. Bill acceptable
  2. Bill payable
  3. Bill receivable
  4. None of these

19.Tn case of endorsement of bill the endorser debits:

  1. Bill payable account
  2. Creditor account
  3. Cash account
  4. Bill receivable account

20.Bank for collection account” is a:

  1. Permanent account
  2. Current account
  3. Fixed account
  4. Temporary account

21.When an acceptor refuses to pay the amount of bill to the holder of bill on its maturity is called:

  1. Honored bill
  2. Dishonored bill
  3. Retired bill
  4. Endorsed bill

22.When a bill is dishonored, the holder of the bill goes to an official called:

  1. Drawer
  2. Notary public
  3. Manager
  4. Inspector

23.When noting charges are paid at the time of dishonor of the bill, the drawee always debits:

  1. Noting charges account
  2. Discount account
  3. Drawer’s account.
  4. Interest account

24.In case of dishonor of bill, noting charges for dishonored bill are always paid by:

  1. Notary Public
  2. Drawer of bill
  3. Acceptor of bill
  4. Holder of bill.

25.When the bill is dishonored acceptor’s account is debited in the books of the:

  1. Endorsee
  2. Bank
  3. Drawer
  4. Drawee

26.Interest on renewal of a bill is an expense to the:

  1. Drawer
  2. Acceptor
  3. Endorser
  4. Endorsee

27. interest on renewal of a bill is an income to the:

  1. Drawee
  2. Debtor
  3. Drawer
  4. Acceptor

28.When a drawee is declared insolvent, which account is to be debited in the books of drawer:

  1. Deficiency account
  2. Bad debts account
  3. None of these
  4. Solvency account

29.In case of retirement of bill, the rebate or discount is a revenue for the:

  1. Holder
  2. Drawer
  3. Payee
  4. Acceptor\

30.Accommodation bills are drawn, accepted and endorsed:

  1. For quarter consideration
  2. Without any consideration
  3. For some consideration
  4. None of these

31.Retiring a bill under rebate means:

  1. Payment of bill before due date
  2. Making payment for the bill after due date:
  3. Dishonored bill.
  4. Discounting bill

32.Bill payable account is a:

  1. Nominal account
  2. Real account
  3. Personal account
  4. None of these

33.A trader whose assets exceed from his liabilities is called:

  1. Debtor
  2. Creditor
  3. Solvent
  4. Insolvent