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Bills of Exchange - Short Questions with Answers

Bills of Exchange - Short Questions with Answers

Bills of Exchange - Short Questions with Answers

Q.1      WHAT IS BILL OF EXCHANGE?

Answer:-    A bill of exchange is a negotiable instrument which is written in evidence Of credit sales. It is an un condition order by the drawer to drawee to certain sum Only to or the order of a certain person  or to the bearer of  bill.
Q.2      WHAT ARE THE NAMES OF PARTIES OF THE BILL?
Answer:-  There are three parties of a bill. 1.drawer            2. drawee   3.Payee
Q.3      DEFINE DRAWER?
Answer:-  A person who sold goods on account to an other party.
Q.4      DEFINE DRAWEE?
Answer:-  A person who purchased goods from drawer on credit.
Q.5      DEFINE PAYEE?
Answer:-  Payee is a person who receive amount from drawee.
Q.6      DEFINE COLLECTION OF BILL ON MATURITY?
Answer:-  When amount of a bill is received by drawer from drawee himself  on due Date is called collection of bill on maturity.
Q.7      WHAT IS DISCOUNTING OF BILL?
Answer:-   When bill is discounted by drawer from his bank before the due date it is Called discounting of bill.

Q.8      DEFINE ENDORSEMENT OF BILL?
Answer:-   When drawee also purchased some goods on credit and endorsed this bill to his creditors is called endorsement of bill.
Q.9      DEFINE BANK FOR COLLECTION?
Answer:-  Bill is sent to bank and when date comes to due, bank received amount from Drawee and deposited into the drawer’s account is called bank for collection.
Q.10    DEFINE RETIRING OF BILL?
Answer:-  When bill is paid by drawee under rebate before due date. It is called retiring of  bill.
Q.11    DEFINE DISHONOR OF BILL?
Answer:-   If drawee is unable to pay bill on due date it is called dishonor of bill.
Q.12    DEFINE NOTING CHARGES?
Answer:-   The amount is paid by holder to notary public on dishonoring of  bill is
Called noting charges. It is received from drawee.
Q.13    DEFINE ACCOMMODATION OF BILL?
Answer:-  It is a bill which is written without credit sales. Only drawee makes temporary Financial assistance to drawer. Drawer is responsible for this amount.
Q.14    WHAT IS MEANT BY MATURITY DATE?
Answer:-  That date which is written on bill for receiving amount is called maturity date.
Q.15    WHAT ARE THE KINDS OF BILL OF EXCHANGE?
Answer:-   i. In land bill of exchange   ii. Foreign bill of exchange.
Q.16    DEFINE IN LAND BILL OF EXCHANGE?
Answer:-  It is a bill which written in a country and also accepted in same country is called In land bill.
Q.17    DEFINE FOREIGN BILL?
Answer:-   A bill is written in a country and accepted in other country is called foreign Bill.
Q.18.   WHAT IS PROMISSORY NOTE?
Answer:-   Promissory note is an unconditional written statement for loan, signed by the maker, to pay certain sum of money, only to or to the order of a certain person or to the bearer of  instrument. It is also like a bill of exchange for payment.
Q.19.   WRITE THE NAME OF PARTIES INVOLVED IN PROMISSORY NOTE?
Answer:-  There are following two parties involved i. Maker or drawer  ii. Payee.
Q.20    DEFINE PAYEE OF PROMISSORY NOTE?
Answer:-   The amount of promissory note is received by a person is called payee.
Q.21    DEFINE DRAWER OF PROMISSORY NOTE?
Answer:-   Drawer is a person who sign the promissory note and promises to make the payment. That amount which has received before like loan.
Q.22    DESCRIBE CHARACTERISTICS OF PROMISSORY NOTE?
Answer:-  There are three characteristics of promissory note.
  1. It is endorse-able instrument.
  2. It must be signed by maker.
  3. It is a written evidence of loan.

Q.23    WHAT IS MEANT BY ACCEPTANCE OF BILL?
Answer:-   When bill is signed by drawee only sign of drawee shown accepted. This process is called the acceptance of  bill.
Q.24    WHAT DO YOU MEAN BY GRACE DAYS?
Answer:-   The drawer  demanded amount from drawee after three days of Mentioned date. These three  days called grace days.
Q.25    DEFINE THE HOLDER OF THE BILL?
Answer:-  A person who present the bill to drawee for payment on due date that person Is called holder of  the bill.
Q.26    WRITE THE KINDS OF ACCEPTANCE?
Answer:-   General acceptance and Qualified acceptance.
Q.27    DEFINE GENERAL ACCEPTANCE?
Answer:-  General acceptance is that acceptance if bill acceptance is accepted with out Any condition.
Q.28    DEFINE QUALIFIED ACCEPTANCE?
Answer:-  Qualified acceptance is that acceptance which is accepted with any condition.
Q.29    WHAT IS BILL RECEIVABLE?
Answer:-   Term bill receivable is used by the drawer because it is his Current Asset.
Q.30    WHAT IS BILL PAYABLE?
Answer:-   Term bill payable is used by the drawee because it is his short term liability.
Q.31    WHAT IS MEANT BY TENOR PERIOD?
Answer:-   That period of time when a bill becomes payable is called tenor period.
Q.32    WHAT IS MEANT BY USANCE?
Answer:-  According to business customs that date which is mentioned for payment Is called Usance.
Q.33    DEFINE RENEWAL OF BILL?
Answer:-   When drawee is unable to pay amount on due date and request to the drawer for cancellation of first bill and a new bill is drawn plus interest is called renewal of a bill.
Further Reading:

TYPES OF BILL OF EXCHANGE

CLASSIFICATION OF BILLS OF EXCHANGE

ACCEPTANCE OF A BILL OF EXCHANGE

HOW TRANSACTIONS RELATING TO BILLS OF EXCHANGE ARE RECORDED?

ACCOUNTING TREATMENT FOR BILLS RECEIVABLE AND BILLS PAYABLE
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