Test your Knowledge in Financial Accounting MCQs Set 3

The method of payment of bills of exchange depend on:


Options are :

  • Reserved basis
  • Cash basis (Correct)
  • Credit basis
  • None of them

Answer : Cash basis

A bill of exchange is a / an:


Options are :

  • A Promise
  • Conditional order
  • Unconditional order (Correct)
  • A request

Answer : Unconditional order

When a bill is endorsed, then endorser has:


Options are :

  • Current liability
  • Contingent liability (Correct)
  • Fixed liability
  • None of these

Answer : Contingent liability

The drawer of the bill allows three additional days to the Drawee for payment, these are called:


Options are :

  • Conditional days
  • Additional days
  • Days of grace (Correct)
  • Days of rebate

Answer : Days of grace

Interest on a renewal of a bill is an expense to the:


Options are :

  • Acceptor (Correct)
  • Endorsee
  • Endorser
  • Drawer

Answer : Acceptor

Expenses relating it sales of goods are recorded:


Options are :

  • Accounting equation
  • In profit and loss account (Correct)
  • Balance Sheet
  • In trading account

Answer : In profit and loss account

Closing stock is recorded in:


Options are :

  • Credit side of trading A/C and Balance sheet (Correct)
  • Profit and loss A/C only
  • Trading A/C only
  • Credit side of Balance sheet

Answer : Credit side of trading A/C and Balance sheet

All assets held in business for permanent use are called:


Options are :

  • Assets destroyed
  • Current assets
  • Total assets
  • Fixed assets (Correct)

Answer : Fixed assets

Bills receivable and debtor are:


Options are :

  • Current assets (Correct)
  • Fixed Assets
  • Long term assets
  • Fictitious assets

Answer : Current assets

How many parties are involved in case of discounting of a bill:


Options are :

  • Three
  • None of these
  • Two (Correct)
  • Four

Answer : Two

The person to whom the bill is transferred will become:


Options are :

  • Endorsee (Correct)
  • Debtor
  • Creditor
  • Endorser

Answer : Endorsee

If the bill is transferred from one person to another person, it is called:


Options are :

  • Endorsement of a bill (Correct)
  • Transferring of a bill
  • Renewal of a bill
  • Discounting of bill

Answer : Endorsement of a bill

The closing stock is valued at?


Options are :

  • Higher than cost
  • Cost price (Correct)
  • Less than cost
  • Market price

Answer : Cost price

Retiring a bill under rebate means:


Options are :

  • Making payment for the bill after the due date
  • Dishonoring of a bill
  • All of the above
  • Making payment for the bill before the due date (Correct)

Answer : Making payment for the bill before the due date

Bills receivable book is a part of the:


Options are :

  • Balance sheet
  • Journal
  • Profit & Loss account
  • Ledger (Correct)

Answer : Ledger

When a drawer discounted the bill, he gets:


Options are :

  • Less than face value (Correct)
  • None of these
  • More than face value
  • Equal to face value

Answer : Less than face value

A bill, which is drawn and accepted in same country:


Options are :

  • Accommodation bill
  • In land bill (Correct)
  • Foreign bill
  • Trade Bill

Answer : In land bill

If the acceptor of a bill of exchange fails to pay it on the due date, he may with the consent of the holder, give a new bill in place of the old one, it is called?


Options are :

  • Endorsement of a bill
  • Dishonoring of a bill
  • Transferring of a bill
  • Renewal of a bill (Correct)

Answer : Renewal of a bill

42. Accommodation bill are drawn, accepted and endorsed:


Options are :

  • Without any consideration (Correct)
  • For some consideration
  • None of these
  • For quarter consideration

Answer : Without any consideration

All duties on goods purchased should be debited to:


Options are :

  • Profit and loss account
  • Balance Sheet
  • Wages Account
  • Trading account (Correct)

Answer : Trading account

A bill of exchange is drawn by:


Options are :

  • Debtor
  • Holder
  • Creditor (Correct)
  • All of the above

Answer : Creditor

A person who draws bill of exchange is called:


Options are :

  • Drawee
  • None of them
  • Payee
  • Drawer (Correct)

Answer : Drawer

If the holder of the bill sells it to bank before maturity date, it is called:


Options are :

  • Endorsement of a bill
  • Retiring of bill
  • Discounting of bill (Correct)
  • Sale of a bill

Answer : Discounting of bill

Amount of the noting charges paid by the drawer is a loss to:


Options are :

  • Endorsee
  • Drawee (Correct)
  • Drawer
  • Endorser

Answer : Drawee

Interest on renewal of a bill is  a loss to the:


Options are :

  • All of the above
  • Drawee (Correct)
  • Payee
  • Drawer

Answer : Drawee

In case of retirement of a bill, the rebate or discount is revenue for the :


Options are :

  • Holder
  • Acceptor (Correct)
  • Drawer
  • Payee

Answer : Acceptor

Bills of exchange is governed by:


Options are :

  • Partnership Act 1932
  • Income Tax Ordinance 2001
  • Company Ordinance 1984
  • Negotiable Instrument act 1881 (Correct)

Answer : Negotiable Instrument act 1881

When bill is accepted without any condition to the order of drawer, it is called:


Options are :

  • Blank acceptance
  • Conditional acceptance
  • General acceptance (Correct)
  • Qualified acceptance

Answer : General acceptance

Bills of exchange are payable at any time when they are presented by the holder, are called:


Options are :

  • Trade bills of exchange
  • Terms bills of exchange
  • Accommodation bills of exchange
  • Demand bills of exchange (Correct)

Answer : Demand bills of exchange

When the bill is written it is known as:


Options are :

  • Drawn (Correct)
  • Accepted
  • Retired
  • Renewed

Answer : Drawn

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