Chapter 7 - Bills of Exchange [Latest edition] Balbharati solutions for Book-keeping and Accountancy 12th Standard HSC Maharashtra State Board

Balbharati solutions for Book-keeping and Accountancy 12th Standard HSC

 

Maharashtra State Board Chapter 7 - Bills of Exchange [Latest edition]

 

 

Select the correct option and rewrite the sentence:-

 

The person on whom a bill is drawn is called a________________.

Drawee

Payee

Drawer

Acceptor

 

Before acceptance the bill is called a________________.

Order

Request

Draft

Instrument

 

When the due date of bill drawn falls due on a public holiday, the payment must be made on the_____________ day.

Same

Preceding

Next

Any

 

The due date of the bill drawn for 2 months on 23rd Nov. 2019 will be______________.

 

23rd Jan. 2020

25th Jan. 2019

26th Jan. 2019

25th Jan. 2020

 

Nothing charges are borne by__________________.

 

Notary public

Drawee

Drawer

Endorsee

 

There are _______________ parties to bill of exchange.

 

Five

Four

Three

Two

 

When a bill is drawn for 2 months after date on 3rd Jan. 2020, its due date will be__________________.

 

3rd Jan. 2020

3rd Mar. 2020

5th Jan. 2020

6th Mar. 2020.

 

Notary Public is_________________.

 

Govt. officer

Drawer

Payee

Endorsee

 

When Acceptor or Drawee does not pay the amount of bill to the holder on the due date it is known as_____________ the bill.

 

Returning

Discounting

Honouring

Dishonouring

 

The person who accepts the bill treats the bill as___________.

Bills payable

Promissory note

Draft

Bills receivable

 

 

Give one word/phrase/term which can substitute the following statement:-

 

Three extra days which are allowed over and above the term of bill.-

Grace days.

 

Fees charged by Notary Public for getting the fact of dishonour noted.  - Noting Charges.

 

Amount which is not recoverable from Drawee on account of insolvency. - Bad debts.

 

A person who is entitled to receive the amount of bill of exchange - .Payee.

 

A person in whose favour a bill endorsed. - Endorsee.

 

Officer appointed by government for noting of dishonour of bill. - Notary Public.

 

Cancellation of bill on maturity in return of a new bill for extended period of credit. - Renewal of Bill.

 

Bill of exchange drawn and accepted without any valuable consideration. - Accommodation bill.

Person who is in possession of Bill of Exchange. - Holder.

 

Conversion of Bill of Exchange into its present value. - Discounting of the bill.

 

 

State True or False with reason:-

 

Inland bill is one which is drawn in one country and payable in another country. - False.

 

Reason

 

Inland bill means, a bill drawn, accepted, and made payable within the territory of one and the same, country. So, a bill is drawn in one country and payable in another country can’t be a inland bill.

 

Retirement of bill means payment of the bill before due date. - True

 

Reason

 

Payment of the bill, by the acceptor of the bill to the holder of the bill before the due date, is known as Retirement of the bill. So retirement of the bill means payment of the bill before the due date.

 

Drawee can transfer the ownership of the bill. - False

 

Reason

 

Drawee is a debtor. He has to pay the amount of the bill to its holder on the due date. Hence he cannot transfer its ownership to another person. Drawer can transfer the ownership of the bill as he is the owner of the bill.

 

Acceptance of bills without making any changes in the terms of the bill is called qualified acceptance. - False.

 

Reason

 

Acceptance of the bill with some changes as regards the terms, amount, place, etc. of a bill is known as qualified acceptance. Acceptance of the bill without making changes as regards the term is called general acceptance.

 

Discounting is a device to convert the bill into its present value. - True.

 

Reason

 

When the drawer or holder of the bill approaches the bank to discount the bill, the bank pays the bill amount after deducting a certain amount (which is known as discounting charges). It means the conversion of the bill into its present value in cash. So, we can say that discounting is a device to convert the bill into its present value.

 

A bill of exchange must be presented to the acceptor on the due date. - True.

 

Reason..

 

To get the payment of the bill from the acceptor, the holder of the bill is required to present it to the acceptor on its due date. Acceptor either honours the bill or dishonours the bill.

 

If a bill is discounted by the holder, no entry is passed in his book when the bill is honoured on the due date. - True.

 

Reason

 

On discounting the bill the holder gives the possession of the bill to the bank. On the maturity date, the bank has to present the bill to the drawee to collect the payment. When discounted bill is honoured, the transaction takes place between drawee and bank.

 

Noting charges are to be borne by the drawer. -  False.

 

Reason

 

Noting charges are to be borne by the drawee only as due to his act of non-payment, the bill is dishonoured and the drawer is not able to get money on its due date.

 

If a bill is drawn payable ‘on-demand’ no grace days are allowed. - True.

 

Reason

 

‘On-demand’ means the amount of the bill is to be paid by drawee immediately on presentation of the bill as no time period is mentioned on it. In demand bill 3 days grace are not allowed by law.

 

There are three parties to a promissory note. - False

 

Reason

 

There are only two parties to a promissory note, i.e. Drawer or maker of the note and drawee or payee of the note.

 

 

Find the odd one:-

 

Retaining

Noting

Discounting

Endorsing

 

Trade bill

Accommodation bill

After date bill

Demand bill

 

Notary Public

Drawer

Drawee

Payee

 

Discounting charges

Rebate

Bank charges

Noting charges.

 

Stamp

Acceptance

Draft

Amount

 

Complete the sentence:-

 

Making payment of bill before the due date of maturity is known as Retirement of Bill.

 

Person whose liabilities are more than his assets and is not in position to pay off his liabilities is Insolvent person.

 

Amount that cannot be paid by acceptor on account of insolvency is known as deficiency.

 

A bill of exchange payable after certain period is known as after date bill.

 

A bill which is drawn and accepted with valuable consideration is known as Trade Bill

 

A person who draws the bill of exchange is known as Drawer.

 

A bill whose due date is calculated from the date of acceptance is known an After sight bill.

 

Recording the fact of dishonour of Bill is known as Noting.

 

When Drawee accepts the bill payable at a particular place only, it is known as qualified acceptance as to place

 

Fees charged by the bank for collection of bill on behalf of holder is bank charges.

 

 

Answer in sentence:-

 

What do you mean by bill of exchange?

A Bill of Exchange is a written order signed by the drawer, directing to a certain person to pay a certain sum of money on-demand or on a certain future date to a certain person or as per his order.

 

What are days of grace?

The three extra days allowed to the drawee or the acceptor of a bill for making payment on it are called Days of Grace.

 

What do you mean by discounting a bill of exchange?

Encashment of a bill of exchange with the bank for certain cash which is less than the face value of the bill, before its due date by its drawer or holder is called Discounting of a Bill of Exchange.

 

What is noting of the bill?

Noting of a Bill of Exchange is the recording the facts of its dishonour by a Notary public.

 

What are noting charges?

Noting Charges are the fees charged by the Notary public for noting the facts of dishonour on the face of the bill and in his official register.

 

What is relationship between Drawer and Drawee?

The relationship between the drawer and the drawee is that of the creditor and debtor.

 

Who is payee of the bill?

The Payee of a Bill is the person to whom the bill is made payable or in whose favour the bill is draw

 

What do you mean by rebate?

Any concession or discount in monetary terms given by the holder of the bill of exchange to the drawee or acceptor, when a bill is retired is called Rebate.

 

What is legal due date?

Date which is arrived at after adding three days of grace to nominal due date is known as Legal Due Date.

 

What is bills payable on demand?

When amount of bill is payable by a drawee on the presentation of a bill, in which time period is not mentioned and grace days are not allowed is known as Bills Payable on Demand.

 

 

Do you agree or disagree with the following statement:

 

A bill of exchange is a conditional order. - Disagree

 

The party which is ordered to pay the amount is known as the payee. - Disagree

 

The person in whose favour the bill is endorsed is known as endorsee. - Agree

 

Rebate or discount given on retiring a bill is an income to the Drawee. - Agree

 

A bill from the point of view of debtor is called Bills payable. - Agree

 

In case of bill drawn payable ‘on-demand,’ no grace days are allowed. - Agree

 

A bill is required to be accepted by Drawer - Disagree

 

A bill of exchange need not be dated. - Disagree

 

A bill before acceptance is called Promissory Note. - Disagree

 

Renewal is request by Drawee to extend the credit period of the bill. - Agree

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