(b) Cash account

BILLS OF EXCHANGE
© Bill payable account

1. The method of payment by bill of exchange depends (c) Bill receivable account
on:
(a) Cash basis 8. At the time of endorsement of a bill, the drawer
credits.
(b) Credit basis
(a) The drawee a/c
(c) Reserve basis
(b) The endorsee’s personal account
(d) None of the above
© Bill receivable account

2. Bill receivable book is a part of the (d)Endorsee’s account

(a) Journal 9 Retiring a bill under rebate means:

(b) Ledger (a) Making payment for the bill before the due
date
© Profit and loss account
(b) Making payment for the bill after the due date
(d)Balance sheet
© Dishonouring bill
3. A bill of exchange contains:
(d)None of the above
(a) An unconditional order
10. At the time of endorsement of a bill, the drawee
(b) A promise debits:

© A request to deliver goods (a) Bill payable account

(d)A conditional order (b) Other party’s account

4. A bill of exchange is drawn by: © No account (No entry)

(a)Debtor (d)None of the above

(b)Creditor 11. If a bill is dishonoured, when presented for payment

by third party, the drawer will debit:
© A holder
(a) Acceptor’s account
(d)Endorsee
(b) Third party’s account
5.Bill receivable account is a:
© Neither of that two
(a) Nominal account
(c) Endorsee
(b) Personal account
12. When noting charges are paid by the bank at the
© Real account time of the dishonour of the bill. The drawee credits:

(d)Expense account (a) Bill payable

6. At the time of drawing a bill, the drawer credits: (b) Discount account

(a) Debtors account © Noting charges a/c

(b) Creditors account (c) Drawer’s account

© Bill receivable account 13. The person to whom a bill is addressed the

(d)Suppliers account (a)Debitor

7. When a bill is discharged, the acceptor debits: (b) Credtior

(a) Creditors account © Holder

(d)Agent
(b) Grace days
14. A bill from the point of view of a creditor is called a
(c) Investment
(a) Bill payable
21. When a bill is accepted without any condition to the
(b) Bill Receivable order of the drawer, it is called

© Bill acceptable (a) Qualified acceptance

(d)Bill reject able (b) General acceptance

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

© Unqualified acceptance
(a) Discount account
(d)None of the above
(b) Endorsement account
22. In case of accommodation bills, if one party
© Interest account becomes insolvent, then the short remittance is
credited to:
(d)Drawee’s account
(a) Deficiency account
16. Refusal by the acceptor to make payment of the bill
on the maturity date is called (b) Bad debts account

(a) Retirement of the bill (c) Insolvency account

(b) Dishonour of the bill (d)Solvency account

© Collection of the bill 23. Accommodation bill are drawn, accepted and
endorsed:
(d)Honour of the Bill
(a) Without any consideration
17. When noting charges are paid at the time of
dishonour of the Bill, the drawee always debits: (b) For some consideration

(a) Noting charges account © Half for consideration

(b) Interest account (d)None of the above

© Discount account 24. Amount of noting charges is the actual expense of:

(d)Drawer’s account (a) Drawee

18. In case of bill of exchange, there are minimums (b) Drawer

(a) Two parties © Banker

(b) Three parties (d)Endorsee

© Four parties 25. The amount deducted by bank of the bill from the
face value of the bill is called:
(d)One party
(a) Interest
19. Bill of exchange is a convenient method for the
transfer of (b) Rebate

(a) Cash © Discount

(b) Goods (d)Commission

© Debt 26. The procedure by which a bill is transferred from

one person to another person for the settlement of
(d)Investment debts is called

20. The period of time after which a bill becomes (a) Retirement
payable is called:
(b) Endorsement
(a) Tenor
 (b) Drawee
© Renewal
© Endorsee
(d) None of the above
(d)Acceptor
27. When the bill is dishonoured bill payable account is-
debited in the books of the: 34. Interest on renewal of a bill is a expense to the:

(a) Bank (c) Drawee

(b) Drawer (a) Drawer

(c) Drawee (c)Seller

(c) Endorsee (d) Endorsee

28. When the bill is dishonoured acceptor’s account is 35. In case of discounting of bill with the bank, the
debited in the books of the acceptor will pass:

(a) Bank (a) Discounting

(b) Drawer (b) Acceptance entry

© Drawee © No entry

(d)Endorsee (d)None of the above

29. When an endorsed bill is dishonoued endorsees or 36. In case of retiring a bill, rebate is treated as expense
creditor’s account is in the books of the: for the:

(a) Bank (a) Holder

(b) Drawee (b) Acceptor

© Drawer © Banker

(d) Agent (d)Agent

30. The drawer always debits acceptors account for 37. The rebate, in case of retiring of a bill is revenue for
noting charges paid the

(a) Honour of a bill (a) Holder

(b) Endorsement of a bill. (b) Acceptor

© Dishonour of a bill © Banker

(d)None of the above

38. When bills are drawn in one country and accepted
31. When a bill is credited renewed interest the account and payable in another country are called
is

(a) Drawer (a) Inland bills

(b) Local Bill
(b) Bank (c) Foreign Bills
(d) None of these
32. When a party becomes insolvent, the bill accepted
by him is treated as:
39. When bills are drawn in one country upon persons
(c) Honoured living in the same country or made payable in the same
(b) Dishonoured country are known as:
(c) Discounted
(d) None of the above (a) Inland

(b) Foreign Bills

33. Interest on renewal of a bill is revenue to the:
© Overseas bills
(a) Drawer
(d)None of the above
40. A promissory note contains. © Dishonoured date

( A) conditional order (d) Bill written date

(b) A promise 47. In case of bill of exchange, every bill has to be

accepted by the
© A request to deliver goods
(a) Drawer
(d)An unconditional order
(b) Drawee
41. A promissory note is written by:
(c) Bank
(a) Debtor
(d) Agent
(b) Creditor

© Bank 48. A liability that will only arise if a certain event occurs
is called:
(d)Agent
(a) Contingent liability
42. Promissory note is a written promise between:
(b) Mutual liability
(a) Four parties
© Future liability
(b) Three parties
(d)None of the above
© Two parties
49. When a bill is dishonoured, the holder of a the bill,
(d) Five parties goes to an official called

43. A promissory note should be: (a) Clerk

(a) Oral (b) Notary public

(b) Written © Inspector

© Verbal (d)Agent

(d)None of the above 50. In case of dishonour, the notary public will charge a
small fee from the holder, is known as:
44. Accommodation bills are drawn and accepted for:
(a) Interest
(a) Financial assistance
© Noting charges
(b) Consideration
(b) Rebate
© Debt
(c) Discount
(d)Loan

45. In case of bill of exchange for obtaining the debt,

legal action can be resorted by:

(a) Drawer
Compiled By: Mubashar Saleem
(b) Drawee

© Banker

(d)Endorsee

46. The due date of a bill of exchange, when the

amount of the bill is payable by the drawee, is called
the:

(a) Acceptance date

(b) Maturity date