{"id":23247,"date":"2021-05-19T17:24:12","date_gmt":"2021-05-19T11:54:12","guid":{"rendered":"https:\/\/mcq-questions.com\/?p=23247"},"modified":"2022-03-02T10:40:48","modified_gmt":"2022-03-02T05:10:48","slug":"ncert-solutions-for-class-11-accountancy-chapter-8","status":"publish","type":"post","link":"https:\/\/mcq-questions.com\/ncert-solutions-for-class-11-accountancy-chapter-8\/","title":{"rendered":"NCERT Solutions for Class 11 Accountancy Chapter 8 Bills of Exchange"},"content":{"rendered":"

Detailed, Step-by-Step NCERT Solutions for 11 Accountancy<\/a> Chapter 8 Bills of Exchange Questions and Answers were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation.<\/p>\n

Bills of Exchange NCERT Solutions for Class 11 Accountancy Chapter 8<\/h2>\n

Bills of Exchange Questions and Answers <\/span>Class 11 Accountancy Chapter 8<\/h3>\n

Test Your Understanding – I<\/span><\/p>\n

Write \u2018True\u2019 or \u2018False\u2019 against each statement regarding a bill of exchange :
\n1. A bill of exchange must be accepted by the payee.
\n2. A bill of exchange is drawn by the creditor.
\n3. A bill of exchange is drawn for all cash transaction.
\n4. A bill payable on demand is called Time bill.
\n5. A person to whom payment is to be made in a bill or exchange is . called payee.
\n6. A negotiable instrument does not require the signature of its maker.
\n7. The hundi payable at sight is called Darshani hiindi.
\n8. A negotiable instrument is not freely transferable.
\n9. Stamping of promissory note is not mandatory.
\n10. The time of payment of a-negotiable instrument need not be certain.
\nAnswer :
\n1. False
\n2. True
\n3. False
\n4. False
\n5. True
\n6. False
\n7. False
\n8. False
\n9. False
\n10. True<\/p>\n

\"NCERT<\/p>\n

Test Your Understanding – II<\/span><\/p>\n

Fill in the blanks with suitable word(s) :
\n1. The person to whom the amount mentioned in the promissory is payable is known as ……………
\n2. Transfer of a negotiable instrument to another person by signing on it, is known as ……………
\n3. In a promissory note, the person who makes the promise to pay is called as ……………
\n4. A person who endorses the promissory note in favour of another is known as ……………
\nAnswer :
\n1. Promisee
\n2. Endorsement
\n3. Promissor
\n4. Endorser<\/p>\n

Test Your Understanding – III<\/span><\/p>\n

Fill in the blanks :
\n1. A bill of exchange is a …………… instrument.
\n2. A bill of exchange is drawn by the …………… upon his ……………
\n3. A promissory note is drawn by …………… in favour of his ……………
\n4. There are …………… parties to a bill of exchange.
\n5. There are …………… parties to a promissory note.
\n6. Drawer and cannot be the same parties in case of a bill of exchange,
\n7. Bill of exchange in Indian language is called ……………
\n8 ………….. days of grace are added in terms of the bill to calculate the date of its
\nAnswer :
\n1. negotiable
\n2. drawer, drawee
\n3. debtor, creditor
\n4. three
\n5. two
\n6. drawee
\n7. Hundi
\n8. Three, maturity<\/p>\n

Short Answer Type Questions<\/span><\/p>\n

Question 1.
\nName any two types of commonly used negotiable instruments.
\nAnswer:
\nIn modern times a very large number of business transactions are made on credit basis. In case of credit sale of goods, the purchaser usually promises to make payment after a certain period. In such a case, the seller would like to get a written undertaking from the buyer to get the payment after a fixed period.<\/p>\n

As such, the seller prepares a document in which he puts in writing all the terms and conditions relating to sale of goods such as amount required to be paid; date of payment; place of payment; and the like. The Buyer puts his signatures on the document and it is known as \u2018Bill of Exchange\u2019.<\/p>\n

As such, the bills of exchange are instruments of credit which facilitate the credit sale of goods. In India, these are known as \u2018Hundis\u2019 which are written in Indian languages and have been in use from the time immemorial. In western countries, the names used for such instruments are \u2018Bills of Exchange\u2019 and \u2018Promissory Notes\u2019.<\/p>\n

The same names are now being increasingly used in India too. All such instruments are governed by Indian Negotiable Instruments Act. 1881. Two commonly used negotiable instruments are Bills of Exchange and Promissory Notes under Negotiable Instruments Act. 1881.<\/p>\n

\"NCERT<\/p>\n

Question 2.
\nWrite two points of distinction between Bills of Exchange and Promissory Notes.
\nAnswer:
\nDistinction between Bill of Exchange and Promissory Notes –<\/p>\n\n\n\n\n\n\n\n
S.No.<\/strong><\/td>\nBasis<\/strong><\/td>\nBill of Exchange<\/strong><\/td>\nPromissory Note<\/strong><\/td>\n<\/tr>\n
(1)<\/td>\nDrawer<\/td>\nThe creditor is the drawer.<\/td>\nThe debtor is the drawer.<\/td>\n<\/tr>\n
(2)<\/td>\nOrder and Promise<\/td>\nIt contains an order to pay.<\/td>\nIt contains a promise to pay.<\/td>\n<\/tr>\n
(3)<\/td>\nParties<\/td>\nIt has three parties, the drawee, the drawer and the payee.<\/td>\nIt has two parties, the promisor and the payee.<\/td>\n<\/tr>\n
(4)<\/td>\nLiability<\/td>\nThe liability of the owner or drawer arises only if the acceptor not pay.<\/td>\nThe promisor has the primary liability to pay.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Question 3.
\nState any four essential features of bills of exchange.
\nAnswer:
\nCharacteristics or Features of Bills of Exchange – The main characteristics of bill of exchange :
\n1. A bill of exchange must be in writing.
\n2. It must contain an order (and not a request) to make payment.
\n3. The order must be unconditional.
\n4. The amount of bill of exchange must be definite.
\n5. The date of payment must be a fixed one.
\n6. It must be signed by the maker (drawer) of the bill.
\n7. It must be signed by the acceptor (drawee).
\n8. The amount mentioned in the bill is payable either on demand or on the expiry of a fixed period.
\n9. The amount is payable either to the bearer of the bill or to a ‘ specified person or to his order.
\n10. It bears stamps according to its amount or is drafted on a stamped paper of the court.<\/p>\n

Question 4.
\nState the three parties involved in a bill of exchange.
\nAnswer:
\nParites to a Bill of Exchange – There are three parties to a bill of exchange :
\n1. Diavver: He is the seller or creditor entitled to receive money from someone. He writes or draws the bill and is known as drawer. The bill of exchange is signed by the drawer of the bill.<\/p>\n

2. Drawee or Acceptor : He is the purchaser or the debtor on whom the bills drawn and who is liable to pay the amount mentioned in the bill. He accepts to pay the amount by writing the word \u201cAccepted\u201d on the bill and then signs it.<\/p>\n

\"NCERT<\/p>\n

3. Payee : The person to whom the payment is to be made is called payee. The drawer himself or a third party may be the payee of the bill. The drawer will be the payee of the bill, if he retains the bill till the date of maturity and receives the payment. The Bank may also be the payee of the bill if the bills is discounted from the bank. In case the bill is endorsed by the drawer to a third part}, the third party known as endorsee will be the payee of the bill. As such, the drawer himself or the bank or the endorsee may be the payee of the bill.<\/p>\n

Question 5.
\nWhat is meant by maturity of bill of exchange.
\nAnswer:
\nDate of Maturity and Days of Grace – The date on which the payment of the bill become due is called the \u2018due date\u2019 or \u2018date of maturity\u2019. In other words, the date on which the duration of the bill comes to an. end is called the due date. While calculating the due date of the bill, it is compulsory to add three days to the period of the bill. These three days are called \u2018Days of Grace\u2019. For example, if a bill is drawn on 1st July, 1994 and is payable 2 months after date, its maturity date will be 4th September. 1994.<\/p>\n

The following points are very significant for calculating the date of maturity :<\/p>\n

(1) If a bill falls due in those months in which there is no corresponding day, i.e., 29th, 30th or 31 st dates, its maturity day will be the last date of such month. For example, if a bill was drawn on 30th January, 1994 for one month, it will . become due on 28th February+ 3 days of grace = 3rd March, 1994, because there is no 30th date in February.<\/p>\n

(2) Bills drawn on 30th May for one month will both become due on 3rd July.<\/p>\n

\"NCERT<\/p>\n

Question 6.
\nWhat is meant by dishonour of a bill of exchange.
\nAnswer:
\nDishonour of a bill is a situation when the acceptor refuses to pay the amount of the bill or due to insolvency of the acceptor. If the bill is dishonoured, the party which gave the bill will be debited with the amount of bill and noting charges and the account of bank or the order see will be credited.<\/p>\n

(i) In the case of bill is retained by the drawer till maturity and dishonoured on due date, the entry in the books of drawer may
\nbe posted as under – Drawer or Acceptor A\/c — Dr.
\nTo Bills Receivable A\/c (Amount of Bill)<\/p>\n

To Cash A\/c (Amount of Noting charges)
\n(ii) When the bill is discounted with the bank and is dishonoured, the entry will be –
\nDrawer or Acceptor A\/c — Dr.
\nTo Bank A\/c (Amount of bill & noting charges)<\/p>\n

(iii) When the bill is endorsed and dishonoured, the entry will be
\nDrawer or Acceptor A\/c — Dr.
\nTo Endorsee\u2019s A\/c’ (Amount of bill & noting charges)<\/p>\n

(iv) When the bill has been sent for collection to bank and is dishonoured
\nDrawer or Acceptor A\/c — Dr.
\nTo Bill for Collection A\/c (Amount of bill)
\nTo Bank A\/c (Amount of noting charges)<\/p>\n

In the books of Drawer or Acceptor if bill is dishonoured, the liability of creditor will be restored.
\nThe following entry is passed –
\nBills Payable A\/c — Dr. (Amount of bill)
\nNoting charges A\/c — Dr. (Amount of noting charges)
\nTo Creditors A\/c (Amount of bill & Noting charges)<\/p>\n

Question 7.
\nName the parties to a promissory note.
\nAnswer:
\nParties to a Promissory Note – There are two parties to a promissory note :
\n1. Maker: He is the person who writes a promissory note and signs it.
\n2. Payee : He is the person who is entitled to get the payment.
\nThere is no acceptor in case of a promissory note because the maker himself is liable to pay the amount.<\/p>\n

Question 8.
\nWhat is meant by acceptance of a Bill of Exchange?
\nAnswer:
\nAcceptance of a bill of exchange means to give the bill debits the account of receiver and treats the bill as a new type of liability called bills payable to the acceptor. The same shall be bills receivable for the drawer and bill payable for the acceptor or drawer.<\/p>\n

When an acceptance of a bill is sent to a creditor, it is considered that his debt has been settled by creating a new liability known as Bills Payable.<\/p>\n

Following journal entries are made in the books of acceptor or drawer are made as under –
\n(i) At the time of Purchase of goods on credit
\nPurchases A\/c — Dr.
\nTo Supplier or Creditor A\/c<\/p>\n

(ii) At the time of acceptance of bill
\nSupplier (Creators) A\/c — Dr.
\nTo Bills Payable A\/c<\/p>\n

\"NCERT<\/p>\n

Question 9.
\nWhat is noting charge of a Bill of Exchange?
\nAnswer:
\nNoting charge meaning – A bill of exchange should be duly presented for payment on the date of its maturity. In case the bill was dishonoured on due date or maturity date, it has got preferably to be noted by Notary Public. For providing this service, a fees is charged which is known as Noting charges.
\nNotary Public noted the following facts-<\/p>\n