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Examination Question

QN1. On 1.1.2011, X draws a bill on Y for Rs.20,000 for 3 months maturity date of the bill will be:
(a) 1.4.2011
(b) 3.4.2011
(c) 4.4.2011
(d) 4.5.2011

View Answer

Answer: (c) 4.4.2011

QN2. On 15.8.2011, X draws a bill on Y for 3 months for Rs.20,000. 18th Nov. was a sudden holiday, maturity date of the bill will be:
(a) 17th Nov
(b) 18th Nov
(c) 19th Nov
(d) 15th Nov

View Answer

Answer: (c) 19th Nov

QN3. On 16.6.2011 X draws a bill on Y for Rs.25,000 for 30 days. 19th July is a public holiday, maturity
date of the bill will be:
(a) 19th July
(b) 18th July
(c) 17th July
(d) 16th July

View Answer

Answer: (b) 18th July

QN4. X draws a bill on Y for Rs.30,000 on 1.1.2011. X accepts the same on 4.1.2011 for period of 3 months after date. What will be the maturity date of the bill:
(a) 4.4.2011
(b) 3.4.2011
(c) 7.4.2011
(d) 8.4.2011

View Answer

Answer: (a) 4.4.2011

QN5. X draws a bill on Y. X endorsed the bill to Z. The payee of the bill will be
(a) X
(b) Y
(c) Z
(d) None

View Answer

Answer: (c) Z

QN6. A bill of Rs.12,000 was discounted by A with the banker for Rs.11,880. At maturity, the bill returned dishonoured, noting charges Rs.20. How much amount will the bank deduct from A’s bank balance at the time of such dishonour?
(a) Rs.12,000
(b) Rs.11,880
(c) Rs.12,020
(d) Rs.11,900

View Answer

Answer: (c) Rs.12,020

QN7. X draws a bill on Y for Rs.20,000 on 1.1.2011 for 3 months after sight, date of acceptance is 6.1.2011. Maturity date of the bill will be:
(a) 8.4.2011
(b) 9.4.2011
(c) 10.4.2011
(d) 11.4.2011

View Answer

Answer: (b) 9.4.2011

QN8. X sold goods to Y for Rs.1,00,000. Y paid cash Rs.30,000. X will grant 2% discount on balance, and Y request X to draw a bill for balance, the amount of bill will be:
(a) Rs.98,000
(b) Rs.68,000
(c) Rs.68,600
(d) Rs.70,000

View Answer

Answer: (c) Rs.68,600

QN9. On 1.1.2011, X draws a bill on Y for Rs.50,000 for 3 months. X got the bill discounted 4.1.2011 at 12% rate. The amount of discount on bill will be:
(a) Rs.1,500
(b) Rs.1,600
(c) Rs.1,800
(d) Rs.1,450

View Answer

Answer: (a) Rs.1,500

QN10. Mr. A draws a bill on Mr. Y for Rs.30,000 on 1.1.2011 for 3 months. On 4.2.2011, X got the bill discounted at 12% rate. The amount of discount will be:
(a) Rs.900
(b) Rs.600
(c) Rs.300
  1. d) Rs.650
  2. View Answer

    Answer: (b) Rs.600

    QN11. X draws a bill on Y for Rs.20,000 for 3 months on 1.1.2011. The bill is discounted with banker at a charge of Rs.100. At maturity the bill return dishonoured. In the books of X, for dishonour, the bank account will be credited by:
    (a) Rs.19,900
    (b) Rs.20,000
    (c) Rs.20,100
    (d) Rs.19,800

    View Answer

    Answer: (b) Rs.20,000

    QN12. On 1.1.2011, X draws a bill on Y for Rs.10,000. At maturity Y request X to renew the bill for 2 month at 12% p.a. interest. Amount of interest will be:
    (a) Rs.200
    (b) Rs.150
    (c) Rs.180
    (d) Rs.190

    View Answer

    Answer: (a) Rs.200

    QN13. On 1.1.2011, X draws a bill on Y for Rs.15,000 for 3 months. At maturity Y request X to accept Rs.5,000 in cash and for balance to draw a fresh bill for 2 months together with 12% p.a. interest, amount of interest will be:
    (a) Rs.200
    (b) Rs.300
    (c) Rs.240
    (d) Rs.380

    View Answer

    Answer: (a) Rs.200

    QN14. On 1.8.2011, X draws a bill on Y “for 30 days after sight”. The date of acceptance is 8.8.2011. The maturity date of the bill will be:
    (a) 8.9.2011
    (b) 10.9.2011
    (c) 11.9.2011
    (d) 9.9.2011

    View Answer

    Answer: (b) 10.9.2011

    QN15. On 1.6.2011, X draws a bill on Y for Rs.25,000. At maturity Y request X to accept Rs.5,000 in cash and noting charges incurred Rs.100 and for the balance X draw a bill on Y for 2 months at 12% p.a. Interest amount will be:
    (a) Rs.410
    (b) Rs.420
    (c) Rs.440
    (d) Rs.400

    View Answer

    Answer: (d) Rs.400

    QN16. On 1.1.2011, X draws a bill on Y for Rs.50,000. At maturity, the bill returned dishonoured as Y become insolvent and 40 paise per rupee is recovered from his estate. The amount recovered is:
    (a) Rs.20,000
    (b) Nil
    (c) Rs.30,000
    (d) 40 paise

    View Answer

    Answer: (a) Rs.20,000

    QN17. X draws a bill on Y for Rs.3,000. X endorsed to Z. Y will pay the amount of the bill to:
    (a) X
    (b) Z
    (c) To himself
    (d) None

    View Answer

    Answer: (b) Z

    QN18. On 1.1.2011, X draws a bill on Y for 3 months for Rs.10,000. On 4.3.2011, Y pay the bill to X at 12% p.a. discount, the amount of discount will be:
    (a) 100
    (b) 200
    (c) 300
    (d) 50

    View Answer

    Answer: (a) 100

    QN19. Ram draws on Aslam a bill for Rs.60,000 on 1.4.2011 for 2 months. Aslam accepts the bill and sends it to Ram who gets it discounted for Rs.58,800. Ram immediately remits Rs.19,600 to Aslam. On due date, Ram being unable to remit the amount due and accepts a bill for Rs.84,000 for 2 months which is discounted by Aslam for Rs.82,200. Aslam sends Rs.14,800 to Ram out of the same. How much discount will be borne by Ram at the time of 14,800 remittance.
    (a) Rs.1,200
    (b) Rs.1,800
    (c) Rs.1,100
    (d) Rs.800

    View Answer

    Answer: (a) Rs.1,200

    QN20. Mr. Bobby sold goods worth Rs.25,000 to Mr Bonny. Bonny immediately accepted a bill on 1.11.2011, payable after 2 months. Bobby discounted this bill @ 18% p.a. on 15.11.2011. On the due date Bonny failed to discharge the bill. Later on Bonny became insolvent and 50 paise is recovered from Bonny’s estate. How much amount of bad debt will be recorded in the books of Bobby:
    (a) Rs.12,500
    (b) Rs.9,437
    (c) Rs.11,687
    (d) Rs.13,650

    View Answer

    Answer: (a) Rs.12,500

    QN21. The purpose of accommodation bill is:
    (a) To finance actual purchase or sale of goods
    (b) To facilitate trade transmission
    (c) When both parties are in need of funds
    (d) None of the above

    View Answer

    Answer: (c) When both parties are in need of funds

    QN22. M sold goods worth of Rs.50,000 to N. On 1.10.2011, N immediately accepted a three month bill. On due date, N requested that the bill be renewed for a fresh period of 3 months. N agrees to pay interest @ 18% p.a. in cash. How much interest to be paid in cash by N?
    (a) Rs.2,250
    (b) Rs.1,800
    (c) Rs.2,000
    (d) Rs.1,100

    View Answer

    Answer: (a) Rs.2,250

    QN23. On 1.1.2011, X draws a bill on Y for Rs.30,000. At maturity Y request X to draw a fresh bill for 2 months together with 12% pa. interest. Noting charges Rs.100. The amount of interest will be:
    (a) Rs.600
    (b) Rs.602
    (c) Rs.500
    (d) Rs.550

    View Answer

    Answer: (b) Rs.602

    QN24. On 18.2.2011 A draw a bill on B for Rs.10,000. B accepted the bill on 21.2.2011. The bill is drawn for 30 days after sight. The maturity date of the bill will be:
    (a) 24.3.2011
    (b) 22.3.2011
    (c) 26.3.2011
    (d) 21.3.2011

    View Answer

    Answer: (c) 26.3.2011

    QN25. X sold goods to Y for Rs.3,00,000. ½ of the amount will be received in cash and balance in B/R. For what amount X should draw the bill on Y.
    (a) Rs.1,50,000
    (b) Rs.3,00,000
    (c) Rs.1,00,000
    (d) Rs.1,20,000

    View Answer

    Answer: (a) Rs.1,50,000

    QN26. A draws a bill on B for Rs.50,000 for 3 months. At maturity, the bill returned dishonoured, noting charges Rs.500. 40 paise in a rupee is recovered from B’s estate. The amount of deficiency to be recorded on insolvency in the books of B will be:
    (a) Rs.20,200
    (b) Rs.30,300
    (c) Rs.19,800
    (d) Rs.19,000

    View Answer

    Answer: (b) Rs.30,300

    QN27. A sold goods to B for Rs.20,000. A will grant 5% discount to B. B requested A to draw a bill. The amount of the bill will be:
    (a) Rs.20,000
    (b) Rs.19,000
    (c) Rs.19,200
    (d) Nil

    View Answer

    Answer: (b) Rs.19,000

    QN28. Fees paid in cash to Notary Public is charged by:
    (a) Drawer
    (b) Drawee
    (c) Holder of the bill of exchange
    (d) None

    View Answer

    Answer: (c) Holder of the bill of exchange

    QN29. A draws a bill on B for Rs.50,000. A endorsed it to C in full settlement of Rs.50,500. Noting charges of Rs.200 as the bill returned dishonoured. A want to pay the amount to C at 2 % discount. The amount to be paid by A to C will be:
    (a) Rs.49,000
    (b) Rs.49,490
    (c) Rs.49,686
    (d) Rs.50,500

    View Answer

    Answer: (c) Rs.49,686

    QN30. A draws a bill on B for Rs.1,00,000. A endorsed the bill to C. The bill return dishonoured. Noting charges Rs.1,000. B request A to accept the amount at 2% discount by a single cheque. The cheque amount will be:
    (a) Rs.98,000
    (b) Rs.98,980
    (c) Rs.99,000
    (d) Rs.99,980

    View Answer

    Answer: (b) Rs.98,980

    QN31. S draws 2 bills of exchange on 1.1.2011 for Rs 3,000 and Rs.5,000 respectively. The bill of exchange for Rs.3,000 is for 2 months, while the bill of exchange for Rs.5,000 is for 3 months. These bills are accepted by K. On 4.3.2011 K requests S to renew the first bill with interest at 18% p.a. for a period of 2 months. S agrees to this proposal. On 20.3.2011 K retires the acceptance for Rs.5,000 the interest rebate i.e., discount being Rs.50. Before the due date of the renewed bill K becomes insolvent and only 60 paise in a rupee can be recovered from his estate. How much bad debt will be recorded in the books of S:
    (a) Rs.1,236
    (b) Rs.1,854
    (c) Rs.3,090
    (d) Rs.3,000

    View Answer

    Answer: (a) Rs.1,236

    QN32. The promissory note should be signed by:
    (a) Drawer
    (b) Drawee
    (c) Payee
    (d) Promiser

    View Answer

    Answer: (d) Promiser

    QN33. Kuntal draws a bill on Shyam for Rs.3,000. Kuntal endorsed it to Ram. Ram endorsed it to Rahim. The payee of the bill will be:
    (a) Kuntal
    (b) Ram
    (c) Shyam
    (d) Rahim

    View Answer

    Answer: (d) Rahim

    QN34. A bill is drawn on 29th Jan. 2011 for one month after date. The date of acceptance is 2nd Feb.2011. The maturity date of the bill will be:
    (a) 28th February
    (b) 1st March
    (c) 2nd March
    (d) 3rd March

    View Answer

    Answer: (d) 3rd March

    QN35. Mr. Rex accepted a bill drawn by Mr. Rabin. Mr. Rabin endorsed the bill to Mr Shekar. On the due date, the bill is dishonored as Mr Rex became insolvent. To record the dishonor of the bill in the books of Mr. Rabin, which of the following accounts should be credited?
    (a) Mr. Rex’s account
    (b) Bills Receivable account
    (c) Mr Shekar’s account
    (d) Bills payable account

    View Answer

    Answer: (c) Mr Shekar’s account

    QN36. Which of the following statements is true?
    (a) A bill cannot be endorsed more than two times
    (b) A bill is drawn by purchaser
    (c) A bill contains an unconditional promise to pay
    (d) Noting charges are borne by the drawee in the event of dishonour of bill

    View Answer

    Answer: (d) Noting charges are borne by the drawee in the event of dishonour of bill

    QN37. For mutual accommodation of A and B, B accepted a bill drawn on him by A for 2 months for Rs.6,000. The said bill is discounted at 12% pa. and remitted 1/3rd of the proceeds to B. The amount remitted by A to B will be:
    (a) Rs.2,000
    (b) Rs.1,960
    (c) Rs.1,920
    (d) Rs.1,900

    View Answer

    Answer: (b) Rs.1,960

    QN38. Lara draws an accommodation bill on Sachin. The proceeds are to be borne between Sachin and Lara in the ratio of 3:1. The amount of bill Rs.6000, discounting charges Rs.120. Discount borne by Sachin will be:
    (a) Rs.90
    (b) Rs.120
    (c) Rs.100
    (d) None

    View Answer

    Answer: (a) Rs.90

    QN39. A draws a bill on B for Rs.4,500 for mutual accommodation in the ratio 2:1. A got it discounted at Rs.4,230 and remitted 1/3rd of the proceeds to B. At the time of maturity, how much amount A should remit to B such that B can pay off the bill?
    (a) Rs.3,000
    (b) Rs.2,880
    (c) Rs.2,920
    (d) Rs.3,010

    View Answer

    Answer: (a) Rs.3,000

    QN40. Suman drew a bill on Sonu for Rs.4,500 for mutual accommodation in the ratio 2:1. Sonu accepted the bill and returned to Suman. Suman discounted the bill for Rs.4,230 and remitted 1/3rd proceeds to Sonu. Before the due date, not having funds to meet the bill, Sonu drew a bill on Suman for Rs.6,300 on the same terms as to mutual accommodation. The second bill was discounted for Rs.6,120. The first bill was honored on the due date and a net amount of Rs. 1,080 was remitted to Suman by Sonu. The proportionate discount charge on both the bills is to be borne by Suman is:
    (a) Rs.180
    (b) Rs.150
    (c) Rs.300
    (d) Rs.120

    View Answer

    Answer: (c) Rs.300

    QN41. Which of the following instrument is not a negotiable instrument:
    (a) Bearer cheque
    (b) Promissory note
    (c) Bill of exchange
    (d) Account Payee – Crossed cheque

    View Answer

    Answer: (d) Account Payee – Crossed cheque

    QN42. On 1.1.2011 Vikas draws a bill of exchange for Rs.10,000 due for payment after 3 months on Ekta. Ekta accepts to this bill of exchange. On 4.3.2011, Ekta retires the bill of exchange at a discount of 12% p.a. Which of the discount is correct for premature payment in the books of Ekta?
    (a) Rs.120
    (b) Rs.100
    (c) Rs.140
    (d) Rs.160

    View Answer

    Answer: (b) Rs.100

    QN43. Neelam sold goods to Dhiman for Rs.4,000 on 1.5.2011. On the same day, she drew on Dhiman a bill for the amount for 3 months, which Dhiman duly accepted. Neelam got the bill discounted with her bank before the due date, Dhiman became insolvent. Later, his estate could pay only 40% of the amount due. What will be the amount of deficiency in the books of Dhiman.
    (a) Rs.3,200
    (b) Rs.2,200
    (c) Rs.2,400
    (d) Rs.2,000

    View Answer

    Answer: (c) Rs.2,400

    QN44. Which of the following is not a foreign bill:
    (a) A bill drawn in India, on a person resident outside India and made payable outside India.
    (b) A bill drawn outside India, on a person resident outside India
    (c) A bill drawn outside India, made payable in India
    (d) A bill drawn on a person resident in India made payable in India

    View Answer

    Answer: (d) A bill drawn on a person resident in India made payable in India

    QN45. A drew a bill on B for Rs.50,000 for 3 months. Proceeds are to be shared equally. A got the bill discounted at 12% p.a. and remits required proceeds to B. The amount of such remittance will be:
    (a) Rs.24,250
    (b) Rs.25,000
    (c) Rs.16,167
    (d) Rs.32,333

    View Answer

    Answer: (a) Rs.24,250

    QN46. From the following information, find out who can draw the bill if Mr A sold goods to B:
    (a) A will draw a bill on B
    (b) B will draw a bill on A
    (c) None of these
    (d) Third party will draw a bill on A

    View Answer

    Answer: (a) A will draw a bill on B

    QN47. When the bill are to be produced to notary public:
    (a) At the time of drawing the bill
    (b) At the time of acceptance of the bill
    (c) At the time of dishonour of the bill
    (d) At the time of “bill for collection”

    View Answer

    Answer: (c) At the time of dishonour of the bill

    QN48. Which of the following statement is false:
    (a) B/R is a negotiable instrument
    (b) B/R must be accepted by drawee.
    (c) There can be three parties in respect of bills of exchange – drawer, drawee & payee
    (d) Oral bill of exchange is also valid

    View Answer

    Answer: (d) Oral bill of exchange is also valid

    QN49. Under which circumstances drawer and payee is same person:
    (a) When drawer discounted the bill with banker
    (b) When drawer endorse the bill to the third party
    (c) When drawer held the bill till maturity
    (d) When drawee rejects to accept the bill

    View Answer

    Answer: (c) When drawer held the bill till maturity

    QN50. Which of the following statement is true:
    (a) Noting charge is an expense to be borne by drawer
    (b) Noting charge is an expense to be borne by drawee
    (c) Noting charge is an expense to be borne by payee
    (d) Noting charge is an expense to be borne by bank

    View Answer

    Answer: (b) Noting charge is an expense to be borne by drawee

    QN51. Which of the following statement is true:
    (a) Account payables can draw a bill on Account receivables
    (b) Account receivables can draw a bill on Account payables
    (c) Bank will draw a bill on customer at the time of overdraft
    (d) One can draw the bill on another under any circumstances

    View Answer

    Answer: (a) Account payables can draw a bill on Account receivables

    QN52. Gouri sold goods to Gupta on 1.6.2011 for Rs.1600. Gupta immediately accepted a three months bill. On due date Gupta requested that the bill be renewed for a fresh period of two months. Gouri agrees provided interest at 9% was paid immediately in cash. What will be the amount of interest in the books of Gouri?
    (a) Rs.20
    (b) Rs.25
    (c) Rs.24
    (d) Rs.28

    View Answer

    Answer: (c) Rs.24

    QN53. X draws a bill on Y on 1.1.2011 for Rs.20,000 for 30 days. What will be the maturity date of the bill:
    (a) 2.2.2011
    (b) 3.2.2011
    (c) 1.2.2011
    (d) 31.1.2011

    View Answer

    Answer: (b) 3.2.2011

    QN54. Ram’s acceptance to Din for Rs.8,000 renewed at 3 months on the condition that Rs.4,000 be paid in cash immediately and the remaining amount will carry interest @ 12% p.a. The amount of interest will be:
    (a) Rs.120
    (b) Rs.80
    (c) Rs.90
    (d) Rs.160

    View Answer

    Answer: (a) Rs.120

    QN55. A draws a bill on B for Rs.30,000. A wants to endorse it to C in settlement of Rs.35,000 at 2% discount with the help of B’s acceptance and balance in cash. How much cash A will pay to B?
    (a) Rs.4,300
    (b) Rs.4,000
    (c) Rs.4,100
    (d) Rs.5,000

    View Answer

    Answer: (a) Rs.4,300

    QN56. Ram gets Ghosh’s acceptance for Rs.12,000 discounted at 2 months at 12% p.a. The amount of discount will be:
    (a) Rs.240
    (b) Rs.120
    (c) Rs.360
    (d) Nil

    View Answer

    Answer: (a) Rs.240

    QN57. If the due date is a public holiday, what will be the due date of the bill:
    (a) Following day
    (b) Preceding day
    (c) The same day only
    (d) One month later

    View Answer

    Answer: (b) Preceding day