Online Test — Bills of Exchange
15 Questions • 15 min • Chapter MCQ
15:00
Question 1 of 15
A bill of exchange contains an unconditional:
Promise
Order to pay
Request
Receipt
Explanation: A bill contains an unconditional order to pay.
Question 2 of 15
The person who makes (draws) the bill is the:
Drawee
Drawer
Payee
Notary
Explanation: The drawer makes the bill and orders payment.
Question 3 of 15
The person who accepts the bill and pays it is the:
Drawer
Drawee (acceptor)
Payee
Endorsee
Explanation: The drawee accepts and pays — the acceptor.
Question 4 of 15
A promissory note contains a:
Order
Promise
Request
Cheque
Explanation: A promissory note is a promise to pay.
Question 5 of 15
Date of maturity = due date plus:
3 days of grace
1 day
10 days
1 month
Explanation: Three days of grace are added.
Question 6 of 15
In the drawer's books, on acceptance the entry is:
Bills Receivable A/c Dr; To Drawee
Bills Payable A/c Dr; To Drawer
Cash A/c Dr; To Sales
Drawee A/c Dr; To Cash
Explanation: The drawer records a bill receivable against the drawee.
Question 7 of 15
Getting a bill discounted gives the drawer:
Full value
Value minus discounting charges
Double value
Nothing
Explanation: The bank pays the value less its discounting charge.
Question 8 of 15
Discounting charges are the drawer's:
Income
Expense (loss)
Asset
Capital
Explanation: The charge is interest for getting money early — an expense.
Question 9 of 15
Transferring a bill to one's creditor is:
Discounting
Endorsement
Retention
Renewal
Explanation: Endorsement transfers the bill to a creditor.
Question 10 of 15
What the drawer does with a bill affects the drawee's books:
Greatly
Not at all
Sometimes doubles them
Cancels them
Explanation: The drawee owes the same amount regardless of the holder.
Question 11 of 15
Failure of the acceptor to pay at maturity is:
Retirement
Dishonour
Renewal
Endorsement
Explanation: Non-payment at maturity is dishonour.
Question 12 of 15
Legal proof of dishonour is obtained by ____ the bill.
Noting
Endorsing
Discounting
Retiring
Explanation: Noting by a notary public records the dishonour.
Question 13 of 15
Noting charges are borne by the:
Drawer
Acceptor (drawee)
Bank
Payee
Explanation: The defaulting acceptor bears them.
Question 14 of 15
Drawing a fresh bill for more time is:
Renewal
Retirement
Noting
Endorsement
Explanation: A new bill for extra time is renewal (usually with interest).
Question 15 of 15
Paying a bill before its due date for a rebate is:
Renewal
Retirement
Dishonour
Discounting
Explanation: Early payment for a rebate is retirement.