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SSC CGL Exam  >  SSC CGL Test  >  Finance and Economics  >  Test: Bills of Exchange- Case Based Type Questions - SSC CGL MCQ

Bills of Exchange- Case Based Type Questions - Free with solutions SSC


MCQ Practice Test & Solutions: Test: Bills of Exchange- Case Based Type Questions (10 Questions)

You can prepare effectively for SSC CGL Finance and Economics with this dedicated MCQ Practice Test (available with solutions) on the important topic of "Test: Bills of Exchange- Case Based Type Questions". These 10 questions have been designed by the experts with the latest curriculum of SSC CGL 2026, to help you master the concept.

Test Highlights:

  • - Format: Multiple Choice Questions (MCQ)
  • - Duration: 20 minutes
  • - Number of Questions: 10

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Test: Bills of Exchange- Case Based Type Questions - Question 1
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Read the following hypothetical Case Study and answer the given questions:

On 1st January 2018, Sushil drew on Parag, who is a debtor for ₹15,000 three bills of exchange: 1st: for ₹4,000 at one month, 2nd: for ₹5,000 at two months and 3rd: for ₹6,000 at three months.

Parag accepted all three bills. On 10th January 2018, Sushil endorsed the first bill to his creditor Anand in full settlement of his account of ₹4,120. This bill was duly met on maturity.

On 20th January 2018, the second bill was discounted from the bank for ₹4,850. This bill was dishonoured on the due date and the bank paid ₹40 as nothing. On Parag’s request Sushil drew a fourth bill on Parag for 2 months for the amount due plus ₹200 as interest.

Third bill was paid under a rebate of 15% p.a. one month before maturity. The fourth bill was sent to the bank for collection on 4th May 2018 and was duly met on maturity.

Q. What is the due date for the Second Bill of Exchange?

Detailed Solution: Question 1

 According to the Indian Negotiable Instruments Act, 1881, the due date for a bill of exchange is calculated by adding the term of the bill to the date it was drawn, plus three days of grace. The second bill was drawn on January 1, 2018, with a term of two months. Adding two months to January 1 gives March 1, 2018. Including the three days of grace, the correct due date is March 4, 2018.

Test: Bills of Exchange- Case Based Type Questions - Question 2
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Read the following hypothetical Case Study and answer the given questions:

On 1st January 2018, Sushil drew on Parag, who is a debtor for ₹15,000 three bills of exchange: 1st: for ₹4,000 at one month, 2nd: for ₹5,000 at two months and 3rd: for ₹6,000 at three months.

Parag accepted all three bills. On 10th January 2018, Sushil endorsed the first bill to his creditor Anand in full settlement of his account of ₹4,120. This bill was duly met on maturity.

On 20th January 2018, the second bill was discounted from the bank for ₹4,850. This bill was dishonoured on the due date and the bank paid ₹40 as nothing. On Parag’s request Sushil drew a fourth bill on Parag for 2 months for the amount due plus ₹200 as interest.

Third bill was paid under a rebate of 15% p.a. one month before maturity. The fourth bill was sent to the bank for collection on 4th May 2018 and was duly met on maturity.

Q. What will be the journal entry for the bill endorsed by Sushil to Anand in the books of Sushil?

Detailed Solution: Question 2

Journal entry for the bill endorsed by Sushil to Anand in the books of Sushil is

Anand Dr. 4,120

To Discount Received A/c 120

To Bills Receivable (I) A/c 4,000

(Being bill endorsed to Anand for the full settlement of his account)

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Test: Bills of Exchange- Case Based Type Questions - Question 3
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Read the following hypothetical Case Study and answer the given questions: On 1st January 2017, Pravin sold goods to Navin for ₹1,00,000 received ₹25,000 in cash and drew two bills, first for ₹45,000 and second for ₹30,000 for two months each. Both the bills are duly accepted by Navin. First bill was endorsed to Shobha in settlement of her account of ₹45,500 and second bill was discounted from the Bank @ 12% p.a. On the due date of these bills, both bills were dishonoured. Shobha has paid ₹100 and Bank has paid `80 as Noting charges. Navin paid ₹20,000 and Noting charges in Cash and accepted a new bill for the balance at three months. The interest on balance @ 18% p.a. was paid in cash. The new bill is immediately endorsed to Jayesh. On the due date of the new bill, Navin became insolvent and nothing was recovered from the estate.

Q. What will be the journal entry in the books of Pravin for the first bill endorsed to Shobha dishonoured?

Detailed Solution: Question 3

Journal entry in the books of Pravin for the first bill endorsed to Shobha dishonoured is

Navin Dr. 45,100

Discount Received A/c 500

To Shobha 45,600

(Being first bill dishonoured and noting charges payable and the discount received account written of)

Test: Bills of Exchange- Case Based Type Questions - Question 4
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Read the following hypothetical Case Study and answer the given questions:

On 1st January 2017, Pravin sold goods to Navin for ₹1,00,000 received ₹25,000 in cash and drew two bills, first for ₹45,000 and second for ₹30,000 for two months each. Both the bills are duly accepted by Navin. First bill was endorsed to Shobha in settlement of her account of ₹45,500 and second bill was discounted from the Bank @ 12% p.a. On the due date of these bills, both bills were dishonoured. Shobha has paid ₹100 and Bank has paid `80 as Noting charges. Navin paid ₹20,000 and Noting charges in Cash and accepted a new bill for the balance at three months. The interest on balance @ 18% p.a. was paid in cash. The new bill is immediately endorsed to Jayesh. On the due date of the new bill, Navin became insolvent and nothing was recovered from the estate.

Q. What will be the journal entry for the bill accepted for the payment to be made to Praveen in the books of Navin?

Detailed Solution: Question 4

Journal entry for the bill accepted for the payment to be made to Praveen in the books of Navin is

Navin Dr. 75,000

To Bills Payable (I) A/c 45,000

To Bills Payable (II) A/c 30,000

(Being acceptance given to Pravin for the two bills)

Test: Bills of Exchange- Case Based Type Questions - Question 5
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What are the parties to a bill of exchange?

Detailed Solution: Question 5

There are 3 parties involved in a payment by bill of exchange:

  • the drawer is the party that issues a bill of exchange – the 'creditor';

  • the beneficiary or payee is the party to which the bill of exchange is payable;

  • the drawee is the party to which the order to pay is sent - 'the debtor'.

Test: Bills of Exchange- Case Based Type Questions - Question 6
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Liability for a discounted bill is a..

Detailed Solution: Question 6

Liability for bill discounted is a Contingent liability. Contingent liability is a potential liability that may occur, depending on the outcome of an uncertain future event.

Test: Bills of Exchange- Case Based Type Questions - Question 7
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Due date of a bill of exchange drawn on 30th January, 2011 for one month will be

Detailed Solution: Question 7

Legal Due Date = Date of Bill + Period of Bill + 3 grace Days

 Due date of a bill of exchange drawn on 30th January, 2011 for one month will be 5 Mar.

Therefore Legal Due Date = 30st jan + 1 months + 3 days

= 28 feb + 3 days

= 3rd March

Test: Bills of Exchange- Case Based Type Questions - Question 8
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Which account will be debited in the books of the acceptor at the time of discharge of a bill?

Detailed Solution: Question 8

A bill is discharged by payment in due course by or on behalf of the drawee or acceptor. While preparing the journal entry for discharge of bill Bills payable account is debited and Drawer account is credited.

Test: Bills of Exchange- Case Based Type Questions - Question 9
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The party which is ordered to pay the amount is known as….

Detailed Solution: Question 9

The person who draws the bill is called the drawer. He gives the order to pay money to third party. The party upon whom the bill is drawn is called the drawee. He is the person to whom the bill is addressed and who is ordered to pay.

Test: Bills of Exchange- Case Based Type Questions - Question 10
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Interest on renewal of a bill is an expense to the?

Detailed Solution: Question 10

For drawer, interest is the income and for acceptor, interest is an expense. Cash or cheque is received by the drawer and is paid by the acceptor. If the acceptor does not pay interest on cash but agreed to pay later then instead of debiting cash/bank, drawer debits the amount of the acceptor.

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About this SSC CGL Practice Test

This test contains 10 MCQs on Bills of Exchange- Case Based Type Questions with detailed solutions for each question. It is part of the Finance and Economics course on EduRev, designed to align with the current SSC CGL syllabus. Each solution explains not just the correct answer but also gives you an understanding of the topic — not just to attempt the question but also help you prepare for the exam with practice.

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