The Bill of Exchange is a negotiable instrument which is a legally binding document containing an order to pay a certain sum of money to a person within a pre-determined time frame or on-demand by the bearer of the instrument.
A creditor issues Bill of Exchange to a debtor for payment of money owed by the debtor for the goods and services availed. A prominent feature of the Bill of Exchange is, it needs to be accepted by a debtor to be valid.
Given below are essential MCQs on the Bill of Exchange to analyze your understanding of the topic. The answers are also given for your reference.
Bill of Exchange MCQs
1. What is the Bill receivable account?
A) Personal Account
B) Machinery Account
C) Real Account
D) Nominal Account
Answer: A
2. A bill of exchange includes.
A) An order to pay
B) A request to pay
C) A promise to pay
D) All the above
Answer: A
3. Which bill is drawn and accepted in the same country?
A) Trade Bill
B) Foreign Bill
C) Inland Bill
D) Accommodation Bill
Answer: C
4. Who draws a bill of exchange?
A) Creditor
B) Debtor
C) Drawer
D) None of the above
Answer: C
5. What is the person known as who draws a bill of exchange
A) Drawer
B) Payee
C) Drawee
D) None of the above
Answer: A
6. What are the three additional days known as that a drawer gives to the drawee for payment
A) Conditional days
B) Additional days
C) Days of grace
D) Days of rebate
Answer: C
7. When the drawee signs the bill, it is considered as
A) Accepted
B) Retired
C) Renewed
D) Endorsed
Answer: A
8. What kind of acceptance is known as when the bill is accepted without any condition?
A) Qualified acceptance
B) Conditional acceptance
C) Blank acceptance
D) General acceptance
Answer: D
9. When the bill is noted from the notary public, it is known as?
A) Noting
B) Discounting
C) Accepting
D) None of the above
Answer: A
10. What is retiring a bill under rebate means?
A) Making a payment of the bill before the due date
B) Dishonoring of a bill
C) Making a payment of the bill after the due date
D) All of the above
Answer: A
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