Accounting MCQs / Q&A

A. Acceptance
B. Unconditional promise to pay
C. Properly stamped
D. Payment to be made legal currency

A. Triplicate
B. Duplicate
C. Single
D. Quadruplicate

A. Unconditional
B. Certainty of amount
C. In writing
D. Amount to be paid in foreign currency

A. 1981
B. 1881
C. 1871
D. 2001

A. 4
B. 2
C. 3
D. 5

A. It must be in writing
B. It contains an unconditional promise to pay
C. It is payable to the bearer
D. It must be signed by the maker
C. According to the Negotiable Instrument Act, promissory note is not payable to the bearer. It must contain an order to pay. So this is not the characteristic of promissory note. Other options are the characteristics of promissory note.

A. When a discounted bill is honoured by the drawee on the due date
B. When a bill is sent to the bank for collection
C. When a bill is renewed at the request of the drawee
D. When a debtor accepts a bill drawn by the drawer

A. When a discounted bill is honoured by the drawee on the due date, A. no journal entry
is passed in the books of the drawer. The entry is passed at the time of discounting of the bill itself and no entry is required if the discounted bill is honoured on due date. Hence, A. is the correct answer. The other alternatives are incorrect because, when a bill is sent to the bank for collection B. a journal entry debiting bills sent to bank for collection and crediting Bills Receivable is passed. When a bill is renewed at the request of the drawee C. a journal entry is passed canceling the old bill and raising a new bill with interest. When a debtor accepts a bill drawn by the drawer D. when a debtor is converted to bills receivable and debtors balance is reduced and Bills Receivable account is increased to extent of the amount passing a journal entry to that effect. Thus, A. is the correct answer

A. Discounting of the bill with the bank
B. Payment of the bill on due date
C. Remitting or receiving the amount
D. Sending the bill to bank for collection
(c ) In case of accommodation bills, the additional entry that is to be passed other than the
usual entries passed with regard to trade bills in the books of the drawer is in respect of (c )
remitting or receiving the amount at the time of discounting the bill and honouring the bill at
maturity. The entries passed are the same in case of discounting the bill with the bank A. and no
additional entry is passed except for sending the of proceeds to the drawee. On payment of
the bill on due date B. no additional entry is passed in the books of the drawer. If the bill is sent to the bank for collection, D. the purpose behind the accommodation bill is defeated. However, no additional entry is required to be passed at the time of sending the bill to the bank for collection D.. Thus, C. is the correct answer.

A. The drawer of the bill
B. The person responsible for dishonour
C. The holder of the bill
D. The endorser of the bill

B. The noting charges are the charges paid to Notary Public for presenting a bill for
payment and to note the fact of dishonour. The charges are to be borne by the person responsible
for dishonour who is none other than the drawee. Thus, the correct answer is B..
The drawer of the bill A. is incorrect answer because the drawer may pay the charges initially but ultimately they are to be borne by the drawee.
The holder of the C. is entitled to receive the payment of the bill and to bear the noting charges on the bill. The endorser D. may be the drawer of the bill in which case he will recover the noting charges from the drawee of the bill. Thus B. is the correct answer.

i. Debit Bills Receivable Account
ii. Debit Drawee‘s Account
iii. Credit Drawee‘s Account
iv. Credit Sales Account
A. Only (i) above
B. Both (ii) and (iv) above
C. Both (i) and (iii) above
D. Both (i) and (iv) above
In the books of the drawer, the accounting treatment involved on receipt of a bill of
exchange duly accepted by the drawee is debit Bills Receivable Account and credit Drawee‘s Account .i.e., the combination of statements in (i) and (iii) alternative C. is the correct answer. The other alternatives are incorrect because the combination of one correct answer with the statement of incorrect answer. Drawee‘s Account is debited (ii) as soon as a sale is made or any advances is made and Drawee‘s Account is not debited when the bill of exchange is accepted and sales is credited (iv) when the sale is made and not at the time of acceptance of bill of exchange. Thus, the alternatives A., statement (i) B., combination of (ii) and (iv) D. combination of (i) and (iv) are incorrect.