MCQ Question for Accountancy Class 11 With Answers Chapter 8 Bill of Exchange

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Bill of Exchange Class 11 Accountancy MCQs Questions with Answers

Refer below for MCQs Bill of Exchange with solutions. Solve questions and compare with the answers provided below

Question. Bill draw on 23rd Oct.2018 for three months due date is
a. 23rd Jan.2019
b. 24th Jan.2019
c. 25th jan.2019
d. 26th jan.2019

Question. A bill draw on 27th Dec.2015 for two months due date is
a. 27th Feb. 2016
b. 1st Mar. 2016
c. 2nd Mar. 2016
d. None of above

Question. A bill of exchange is order to Make payment by
a. Conditional
b. Unconditional
c. A & B both
d. None of the Above

Question. Ram failed to pay his acceptance of Rs.20000 (noting charges rs.200) and requited for new bill with interest @6% for 3 months. New bill drew for
a. Rs.20000
b. Rs.20200
c. Rs.20500
d. None of the Above

Question. A Bill of exchange is generally drawn by
a. Seller
b. Buyer
c. Customer
d. None of the Above

Question. If Drawee paid the bill before maturity is known
a. Renewal of a bill
b. Dishonour of a bill
c. Retirement of a bill
d. Endorsement of a bill

Question. Noting charges are borne by
a. Drawee
b. Drawer
c. Holder of bill
d. Notary Public

Question. In which Act a bill of exchange is defined as an “Negotiable Instrument”
a. Negotiable Instrument Act 1881
b. Negotiable Instrument Act 1932
c. Negotiable Instrument Act 1956
d. Negotiable Instrument Act 1856

Question. Noting charges are paid by
a. Drawee
b. Drawer
c. Holder of bill
d. Notary Public

Question. Who is Payee of the bill on Due date of bill
a. Drawee
b. Drawer
c. Holder of bill
d. Notary Public

Question. Days of grace will be added to ascertain the due date of term bill
a. One day
b. Two days
c. Three days
d. None of the above

Question. Liability for a discounted bill is a
a. Contingent liability
b. Current liability
c. Non-current Liability
d. None of the Above

Question. A bill of exchange must be accepted by
a. Drawer
b. Drawee
c. Payee
d. Holder of bill

Question. A bill payable on demand is called
a. Time Bill
b. Sight Bill
c. Endorsement of bill
d. Retiring of the bill

Question. When rebate on a Bill allowed
a. On Renewal of a bill
b. On Dishonour of a bill
c. On Retirement of a bill
d. On Endorsement of a bill

Question. The Bills Receivable book is part of
a. Journal
b. Ledger
c. Trial balance
d. Balance sheet

Question. If due date of bill falls on a holiday then the maturity date is on
a. Next day of the Maturity date
b. A day before the Maturity date
c. On maturity date
d. After three days

Question. Bill at sight has a grace period of
a. One day
b. Two days
c. Three days
d. None of the above

Question. Noting charges are incurred
a. On Renewal of a bill
b. On Dishonour of a bill
c. On Retirement of a bill
d. On Endorsement of a bill

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

Question. Which of the following statements are correct?
(i) Three days added for ascertaining the date of maturity of bills of exchange are called grace days.
(ii) The person in whose favour an endorsement of bills of exchange is made is called endorsee.
(iii) The fee charged for getting the bill noted is called noting charges.
Alternatives
a. (ii) and (iii) are correct
b. (i) and (ii) are correct
c. (i) and (iii) are correct
d. All are correct  

Question. A bills of exchange is drawn by a ……… .
a. shareholder
b. debtor
c. creditor
d. foreigner  

Question. ‘‘Sometimes the purchaser of the goods himself writes a note, signs it and gives it to the seller of the goods.’’ This type of instrument is known as
a. Credit note
b. Promissory note
c. Debit note
d. All of these  

Question. A draws a bill on B for ₹ 1,50,000. A endorsed it to C in full settlement of ₹ 1,51,500. Noting charges of ₹ 600, as the bill returned dishonoured. A wants to pay the amount to C at 2% discount. The amount to be paid by A to C will be
a. ₹ 1,37,000
b. ₹ 1,38,470
c. ₹ 1,49,058
d. ₹ 1,51,500  

Question. The party who is ordered to pay the amount is known as ……… .
a. Payee
b. Drawee
c. Drawer
d. All of these

Question. On 12th July, 2021, A draws a bill on B for ₹ 50,000 for 1 month and 15th August is a public holiday.
What will be the maturity date of the bill?
a. 13th August, 2021
b. 16th August, 2021
c. 14th August, 2021
d. 15th August, 2021 

Question. ‘‘I owe you ₹ 50,000,’’ it is a
a. promissory note
b. bill of exchange
c. acknowledgement of debt
d. None of these  

Question. A draws a bill on X for ₹ 1,20,000 for 3 months. A got the bill discounted at a rate of 12%. The amount of discount will be
a. ₹ 3,600
b. ₹ 2,400
c. ₹ 1,200
d. ₹ 2,600 

Question. Which of the following Act defines the bills of exchange?
a. Indian Partnership Act, 1932
b. Indian Companies Act, 2013
c. Indian Negotiable Instrument Act, 1881
d. None of these 

Question. Which among the following will be the journal entry in the books of drawer for sending the bill for collection?
a. Bill Sent for Collection A/c              Dr
          To Drawee
b. Bill Sent for Collection A/c              Dr
          To Bills Receivable A/c
c. Drawee A/c                                    Dr
           To Bill Sent for Collection A/c
d. None of the above  

QuestionWhich of the following is a type of bills of exchange?
a. Trade bill
b. Accommodation bill
c. Promissory note
d. Both a. and b. 

Question. X draws a bill on Y for ₹ 10,000. The bill is duly accepted by Y. On due date, bill was dishonoured and X paid ₹ 200 as noting charges. Which of the undermentioned journal entries reflect correct entry at the time of dishonour in books of X?
a. Y                                          Dr   10,200
        To Bills Receivable A/c                            10,200
b. Y                                          Dr   10,200
        To Cash A/c                                            10,200
c. Y                                          Dr   10,200
        To Bills Receivable A/c                            10,000
        To Cash A/c                                            200
d. Bills Receivable A/c             Dr   10,200
        To Y                                                      10,200 

Question. When a bill is drawn to settle a trade debt, it is known as
a. Proper bill
b. Exchange bill
c. Trade bill
d. Accommodation bill  

Assertion-Reasoning MCQs :

There are two statements marked as Assertion a. and Reason (R). Read the statements and choose the appropriate option from the options given below.
a. Assertion a. is correct, but Reason (R) is wrong
b. Both Assertion a. and Reason (R) are correct
c. Assertion a. is wrong, but Reason (R) is correct
d. Both Assertion a. and Reason (R) are wrong

Question. Assertion a. A bill given to a creditor is said to be bills payable.
Reason (R) In case of a bills of exchange, the drawer and the payee can be the same person.  

Question. Assertion a. When the bill has been discounted with bank and it is dishonoured, then noting charges will be debited in books of drawer.
Reason (R) Noting charges is an expense for drawer.  

Question. Assertion a. Promissory note does not require any acceptance.
Reason (R) Drawer of the promissory note himself promises to make the payment. 

Case Based MCQs :

Rakesh runs a boutique in Karol bagh, Delhi. 80% of his transactions are on credit. Therefore, to avoid any default on part of buyers, he always use bills of exchange.
On 1st February, 2021, Ritika purchased goods worth ₹ 40,000 on credit. Ritika requested him to drew  three bills of exchange instead of one. Therefore, he drew on her, three bills of exchange for ₹ 15,000, ₹ 13,000 and ₹ 12,000 respectively. These bills were for 1 month, 2 months and 3 months respectively. 
The first bill was endorsed to his creditor, Anuj.
The second bill was discounted with his bank on 4th February, 2021 @ 12% p.a. and the third bill was sent to bank for collection on 30th April, 2021. On the due dates, all bills were duly met by Ritika. Bank sent the collection advice for the third bill after deducting ₹ 75 as collection charges.

Question. Which of the aforementioned journal entry willbe passed in books of Rakesh for discounting 2nd bill with the bank?
a. Bank A/c                                     Dr   12,740
       To Bills Receivable (No.2)                                   12,740
b. Bank A/c                                     Dr   12,740
Discounting Charges A/c                Dr   260
       To Bills Receivable (No.2)                                    13,000
c. Bank A/c                                      Dr   13,000
       To Bills Receivable A/c (No.2)                              13,000
d. Bank A/c                                      Dr   11,440
Discounting Charges A/c                 Dr   1,560
        To Bills Receivable (No.2) A/c                             13,000 

Question. Which of the undermentioned journal entry will be passed in the books of Ritika if Rakesh send third bill to bank for collection?
a. Bill Sent for Collection A/c          Dr   12,000
       To Bills Receivable (No.3) A/c                        12,000
b. Bills Payable A/c (No.3)              Dr   12,000
       To Bill Sent for Collection A/c                         12,000
c. Bill Sent for Collection A/c          Dr   12,000
       To Rakesh A/c                                                12,000   
d. Nil  

Question. The person to whom bill is endorsed is called ……… .
a. Endorser
b. Endorsee
c. Acceptor
d. Acceptee 

Question. Which of the following journal entry shows the correct treatment for third bill on its due date?
a. Bank A/c                                    Dr   11,925
        To Bill Sent for Collection A/c                        11,925
b. Bank A/c                                    Dr   11,925
Bank Charges A/c                            Dr   75
        To Bill Sent for Collection A/c                        12,000
c. Bank A/c                                    Dr   12,000
        To Bill Sent for Collection A/c                        12,000
d. Bank A/c                                    Dr   11,925
Bank Charges A/c                            Dr   75
         To Bills Receivable (No.3) A/c                       12,000  

Shri Ram Jewellers in Chandni chowk deals in crafting timeless pieces of handmade gold jewellery since  1950. CEO Mohit Gupta has decided to sell goods on credit to their old customers as a gesture for their customer loyalty over years. But to avoid any default on part of their customers, they decided to draw bill of exchange.
On 1st April, 2021, Rohan Kapoor purchased gold ring for ₹ 60,000. On the same date, Mohit drew a bill  of the same amount for 3 months. The bill was accepted by Rohan. Mohit discounted the bill with his  bank on 4th April, 2021 @ 18% p.a. On the due date, the bill was dishonoured and noting charges ₹ 850  were paid by the bank. Rohan agreed to pay ₹ 60,500 in full settlement after 10 days of dishonour of the  bill.

Question. Which of the following journal entry will be passed in the books of Mohit Gupta upon dishonour of bill?
a. Rohan                           Dr   60,850
       To Bank A/c                                     60,850
b. Rohan                           Dr   58,150
       To Bank A/c                                     58,150
c. Rohan                           Dr   60,850
       To Bills Receivable A/c                      60,000
       To Bank A/c                                      850
d. Bills Receivable A/c         Dr   60,850
       To Rohan                                          60,000
       To Bank                                            850  

Question. “Mohit drew a bill of the same amount for 3 months”. In this case, Mohit is ……… .
a. drawer
b. drawee
c. Either a. or b.  
d. None of these 

Question. Consider the following statements about bills of exchange.
(i) Bills of exchange is a legal document under Negotiable Instrument Act, 1881.
(ii) Bills of exchange must contain an unconditional promise to pay.
Which of the following is incorrect?
a. Only (i)
b. Only (ii)
c. Both (i) and (ii)
d. None of these 

Question. Which of the aforementioned journal entry will be passed in books of Mohit upon receiving the payment?
a. Bills Receivable A/c       Dr   60,000
         To Rohan                                      60,000
b. Rohan                          Dr   60,000
         To Bills Payable A/c                        60,000
c. Bank A/c                      Dr   60,500
         To Rohan                                      60,500
d. No Entry Required    

Fill In The Blanks.

Question. Bill of Rs.5,000 receivable after two months discounted @ 6% p.a., after discounting bank will pay Rs. ………

Question. A person who draws the bill is known as………..

Question. Bills of exchange are accepted by ……  

Question. Drawer is the……………….of bills of exchange.

Question. Mr. Rahul bought goods of Rs. 40,000 and accepted 4 numbers of bills with equal amount payable after 1 month, 2 months, 3months and 4 months with interest @10% p.a. total interest of Rs…….. is paid immediately on all bills.

.Question. Bills receivable account comes under …….Assets in balance sheet.

Question. Neha failed to pay her acceptance of rs.12000 (noting charges rs.100) and requited for new bill of rs………with interest @6% for 3 months.

Question. Liability to pay Noting Charges is taken by….…

Question. Bill payable on demand is called ……..

Question. A charge collected by the bank on dishonoured bill is known as………….

Question. ………….include Creditors and Bills Payables.

Question. Mr. X sold goods to Mr. Y @10% trade discount on Jan 1, 2019 and accepted a bill of Rs. 9,000 for 2 months on Feb 1, 2017. Y returns goods of Rs. 3000 and requested to draw a new bill for 2 months with interest @6% p.a. amount of interest will be Rs………..   

Question. There is contingent liability of Mr. Mohan towards bank because he gets the bill………..

Question. In case the bill gets dishonoured………..a/c is debited.

Question. If maturity date of bill is national holiday then due date will be ……

True/False. 

Question. A charge collected by bank on dishonoured is known as rebate.

Question. Drawee may have to pay interest to the drawer for the extended period of credit.

Question. Acceptor of bill is known as drawer.

Question. When discounted bill is dishonoured debtor is debited in the book of drawer.

Question. If on maturity date of bill is national holiday then maturity date will be next working day.

Question. Payee can be change in a bill of exchange but payer cannot be change in any case.

Question. Ram draws a bill on Shyam which is ‘bill at sight’ on 28 March and pay as soon as possible. Then days of grace will be added for computing due date.

Question. If maturity date of bill is unforeseen holiday then maturity date will be next working day.

Question. The holder allows some discount called noting charges. 

Question. Maker is also known as Drawer.

Question. A liability to pay the noting charges is always associated with drawee.

Question. ‘A’ draws a bill on ‘B’, here A is drawer.

Question. ‘B’ accepted a bill from ‘A’ now in any case payer can be change.

Question. Ram draws a bill on Kamal and Kamal accepted a bill, now Kamal became drawer of the bill.

Question. Dharma transfer a Rs.5,000 bill to his creditor is called endorsement.

Question. ‘A’ requested to ‘B’ draw a new bill & if ‘B’ charges extra amount from A then such amount is called interest.

Question. Bill of exchange is a convenient way of credit.

Question. Anand draws a bill on Vijay & maturity date is 15 August now he has to pay amount to Anand on 16 August.

Match The Following

Question. Identify–

(i) The person upon whom the bill of exchange is drawn	a) Drawee
(ii) Person in whose favour the bill of exchange is transferred	b) Payee
	c) Endorsee

Question. Identify the terms-

i) The bill kept till maturity	a) Dishonoured
ii) The bill is transferred to creditor	b) Retirement of bill
iii) Payment of bill before due date	c) Bill is retained
	d) Endorsement

Question. Identify–

i) A draws bill	a) C is Drawee
ii) B accepts the bill	b) A is Drawer
iii) A endorsed bill to C	c) B is Drawer
	d) C is Creditor
	e) B is Acceptors

Question. Identify–

i) Charge Deducted by Notary Public	a) Bank Charges
ii) Charges deducted by bank at the time of discount of bill	b) Noting Charges
	c) Discounting Charges
	d) SMS Charges

Question. For A and B the bill is-

i) A draws bills of exchange and gets it back after acceptance	a) Bills Payable
ii) B accepts the bill and returned it back	b) Debtor
	c) Creditor
	d) Bills Receivables

Question. Identify the act-

i) Bills of exchange is governed by	a) Indian contract act 1872
ii) Single entry system is prohibited by	b) Negotiable instrument act 1881
	c) Companies act 2013

Question. Drawee will pay or receive-

i) On Pre – payment of bill amount	a) Noting charges
ii) On dishonour of bill	b) Interest
iii) On extending the period of bill	c) Rebate

Question. Match the terms-

i) Request for new bill	a) Retiring of bill
ii) Non- payment of bill amount on maturity	b) Dishonour of bill
	c) Renewal of Bill

Question. Following is paid to whom-

i) Noting Charges	a) Drawer
ii) Discounting charges on dishonour of bill	b) Drawee
iii) Interest on renewal of bill	c) Notary Public
	d) Bank

Question. Bill draws on

i) 1st July (for Two month)	a) 4 th Sep.
ii) 15th July ( for Three months)	b) 4 th Dec.
iii) 1st August (for four months)	c) 18 th Oct.

Question. Identify-

i) Authenticates the fact of dishonour	a) Drawee
ii) Authenticates the fact that bill is accepted	b) Drawer
	c) Notary Public

Question. Identify-

i) B/R endorsed dishonoured are debited to	a) Bank A/C
ii) Bill honoured during the year will be debited to	b) B/P A/C
	c) Debtors A/C

Question. Identify-

i) Noting charges is paid when the bill of exchange is	a) got discounted from bank
ii) The rebate on the bill is received by the drawee when the bill is	b) Paid before maturity
	c) dishonoured on date of maturity

We hope you liked MCQ Class 12 Accountancy Chapter 8 Bill of Exchange with answers provided above. In case you have any questions please post them in the comments section below and our Accountancy teachers will provide a response. Also read DK Goel Class 11 Solutions