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SSC CGL Exam  >  SSC CGL Tests  >  Test: Bills Of Exchange And Promissory - 3 - SSC CGL MCQ

Test: Bills Of Exchange And Promissory - 3 - SSC CGL MCQ


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30 Questions MCQ Test - Test: Bills Of Exchange And Promissory - 3

Test: Bills Of Exchange And Promissory - 3 for SSC CGL 2024 is part of SSC CGL preparation. The Test: Bills Of Exchange And Promissory - 3 questions and answers have been prepared according to the SSC CGL exam syllabus.The Test: Bills Of Exchange And Promissory - 3 MCQs are made for SSC CGL 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Bills Of Exchange And Promissory - 3 below.
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Test: Bills Of Exchange And Promissory - 3 - Question 1
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​On 1.1.05 X draws a bill on Y for Rs 20,000 for 3 months due date of the bill will be :

Detailed Solution for Test: Bills Of Exchange And Promissory - 3 - Question 1


The bill drawn by X on Y is due after 3 months. To find the due date, we need to add 3 months to the issue date of the bill.


Given:


Date of drawing the bill: 1.1.05


Amount of the bill: Rs 20,000


Due period: 3 months


Calculation:


To find the due date, we need to add 3 months to the issue date of the bill.


Since the issue date is 1.1.05, we need to add 3 months to it.



  • January + 3 months = April

  • 1 + 3 = 4


Therefore, the due date of the bill will be 4.4.05.


Answer:


The due date of the bill will be 4.4.05.

Test: Bills Of Exchange And Promissory - 3 - Question 2
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On 15.8.05 X draws a bill on Y for 3 months for Rs. 20,000. 18th Nov was a sudden holiday, due date of the bill will be:

Detailed Solution for Test: Bills Of Exchange And Promissory - 3 - Question 2

To find the due date of the bill, we need to calculate the maturity date by adding the number of days mentioned in the bill to the date of drawing.
Given:
- The bill is drawn on 15th August 2005.
- The bill is for 3 months.
To calculate the maturity date, we need to add 3 months to the drawing date. Since each month has a different number of days, we need to consider it while calculating the maturity date.
Steps to calculate the maturity date:
1. Convert the drawing date to a date format that can be easily manipulated. In this case, we can use the format DD/MM/YYYY (15/08/2005).
2. Add 3 months to the drawing date. Since we need to consider the number of days in each month, we cannot simply add 90 days. Instead, we will add the number of days in each month individually.
3. Start by adding 31 days to the drawing date, which represents the number of days in August. The result will be 15/08/2005 + 31 days = 15/09/2005.
4. Next, add 30 days to the previous result, which represents the number of days in September. The result will be 15/09/2005 + 30 days = 15/10/2005.
5. Finally, add 31 days to the previous result, which represents the number of days in October. The result will be 15/10/2005 + 31 days = 15/11/2005.
6. Therefore, the due date of the bill will be 15th November 2005.
Answer: C. 19th Nov
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Test: Bills Of Exchange And Promissory - 3 - Question 3
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On 16.6.05 X draws a bill on Y for Rs 25,000 for 30 days. 19th July is a public holiday, due date of the bill will be:

Detailed Solution for Test: Bills Of Exchange And Promissory - 3 - Question 3

To find the due date of the bill, we need to consider the duration of the bill and exclude any non-working days.
Given information:
- The bill is drawn on 16.6.05 for 30 days.
- 19th July is a public holiday.
Steps to find the due date:
1. Calculate the due date by adding the duration of the bill (30 days) to the date it was drawn (16.6.05).
- Due date = 16.6.05 + 30 days = 16.7.05
2. Check if the due date falls on a non-working day (public holiday).
- The due date is 16.7.05.
- 19th July is a public holiday.
3. Since the due date falls on a non-working day, we need to find the next working day.
- The next working day after 16.7.05 is 17th July.
4. Therefore, the due date of the bill will be on 17th July.
Answer: C: 17th July.
Test: Bills Of Exchange And Promissory - 3 - Question 4
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X draws a bill on Y for Rs 30,000 on 1.1.05. X accepts the same on 4.1.05. Period of the bill 3 months after date. What will be the due date of the bill:
Detailed Solution for Test: Bills Of Exchange And Promissory - 3 - Question 4

To determine the due date of the bill, we need to consider the period of the bill and the acceptance date.
Given:
- X draws a bill on Y for Rs 30,000 on 1.1.05.
- X accepts the same on 4.1.05.
- Period of the bill is 3 months after the date.
To find the due date, we need to add the period of the bill (3 months) to the acceptance date (4.1.05).

Calculating the due date:


- Date of acceptance: 4.1.05 (4th January 2005)
- Period of the bill: 3 months
Adding 3 months to the acceptance date:
- Month: 4 + 3 = 7 (July)
- Day: 1 (same as acceptance date)
- Year: 05 (2005)
Therefore, the due date of the bill is 1.7.05 (1st July 2005).

Answer:


The due date of the bill is 1.7.05 (1st July 2005).
Test: Bills Of Exchange And Promissory - 3 - Question 5
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X draws a bill on Y. X endorsed the bill to Z. The payee of the bill will be
Detailed Solution for Test: Bills Of Exchange And Promissory - 3 - Question 5

X draws a bill on Y. X endorsed the bill to Z. Z will be the payee of the bill.

Test: Bills Of Exchange And Promissory - 3 - Question 6
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A bill of 12,000 was discounted by A with the banker for 11,880. At maturity, the bill returned dishonoured, noting charges Rs 20. How much amount will the bank deduct from A’s bank balance at the time of such dishonour?
Detailed Solution for Test: Bills Of Exchange And Promissory - 3 - Question 6

To find out the amount that the bank will deduct from A's bank balance at the time of dishonour, we need to consider the following information:
- The bill of 12,000 was discounted by A with the banker for 11,880. This means that A received 11,880 from the banker in exchange for the bill.
- At maturity, the bill returned dishonoured, noting charges of Rs 20. This means that there was an additional charge of Rs 20 for the dishonoured bill.
To calculate the amount deducted from A's bank balance, we need to add the dishonour charges to the discounted amount:
11,880 (discounted amount) + 20 (dishonour charges) = 11,900
Therefore, the bank will deduct an amount of Rs 11,900 from A's bank balance at the time of dishonour.
Answer: D: 11,900
Test: Bills Of Exchange And Promissory - 3 - Question 7
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X draws a bill on Y for Rs 20,000 on 1.7.05 for 3 months after sight,  date of acceptance is 6.1.05. Due date of the bill will be:
Detailed Solution for Test: Bills Of Exchange And Promissory - 3 - Question 7

 

  • Given:
  • X draws a bill on Y for Rs 20,000 on 1.7.05 for 3 months after sight, date of acceptance is 6.1.05.
  • To find:
  • The due date of the bill.
  • Explanation:
  • The due date of the bill can be calculated by adding the number of days after sight to the date of acceptance.
  • Here, the bill is drawn for 3 months after sight. So, we need to calculate the number of days in 3 months.
  • Calculation:
  • Number of days in 3 months = 3 * 30 (assuming each month has 30 days) = 90 days.
  • Date of acceptance = 6.1.05
  • 31 days in January (since January has 31 days, so 6th to 31st January is 25 days).
  • 28 days in February (2005 is not a leap year, so February has 28 days).
  • 31 days in March.
  • After 31st March, we add the remaining days: 90 - (25 + 28 + 31) = 6 days into April.
  • So, 90 days after 6th January 2005 is 6th April 2005.

 

Test: Bills Of Exchange And Promissory - 3 - Question 8
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X sold goods to Y for Rs 1,00,000. Y paid cash Rs 30,000. X will grant 2% discount on balance, and Y request X to draw a bill for balance, the amount of bill will be:
Detailed Solution for Test: Bills Of Exchange And Promissory - 3 - Question 8

Given:
- X sold goods to Y for Rs 1,00,000.
- Y paid cash Rs 30,000.
- X will grant 2% discount on balance.
- Y requested X to draw a bill for the balance amount.
To find: The amount of the bill that X will draw for the balance amount.
Calculation:
1. The total amount of the goods sold is Rs 1,00,000.
2. Y paid Rs 30,000 in cash.
3. The balance amount is Rs 1,00,000 - Rs 30,000 = Rs 70,000.
4. X will grant a 2% discount on the balance amount.
- 2% of Rs 70,000 = Rs 1,400.
5. The bill amount will be the balance amount minus the discount amount.
- Rs 70,000 - Rs 1,400 = Rs 68,600.
Therefore, the amount of the bill that X will draw for the balance amount is Rs 68,600.
Answer: C.

68,600

Test: Bills Of Exchange And Promissory - 3 - Question 9
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On 1.1.05 X draws a bill on Y for Rs 50,000 for 3 months. X got the bill discounted 4.1.05 at 12% rate. The amount of discount on bill will be:
Detailed Solution for Test: Bills Of Exchange And Promissory - 3 - Question 9
Problem:
On 1.1.05, X draws a bill on Y for Rs 50,000 for 3 months. X got the bill discounted on 4.1.05 at a 12% rate. Find the amount of discount on the bill.

To find the amount of discount on the bill, we need to calculate the discount using the following formula:
Discount = (Bill Amount * Rate * Time) / 100
Given:
Bill Amount = Rs 50,000
Rate = 12%
Time = 3 months
Calculation:
Substituting the given values into the formula:
Discount = (50,000 * 12 * 3) / 100
= (6,00,000) / 100
= Rs 6,000
Therefore, the amount of discount on the bill is Rs 6,000.
Test: Bills Of Exchange And Promissory - 3 - Question 10
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Mr. A draws a bill on Mr. Y for Rs 30,000 on 1.1.06 for 3 months. On 4.2.06. X  got the bill discounted at 12% rate. The amount of discount will be:
Detailed Solution for Test: Bills Of Exchange And Promissory - 3 - Question 10
Calculation of Discount:
To find the amount of discount, we need to calculate the interest on the bill for the period from 1.1.06 to 4.2.06 at a rate of 12%.
Step 1: Calculate the time:
The bill is drawn for 3 months, but it is discounted after 1 month and 4 days. So, the actual time for which the bill is discounted is 1 month and 4 days.
Step 2: Convert the time into a fraction of a year:
1 month and 4 days can be written as 1 + (4/30) months.
To convert it into a fraction of a year, we divide it by 12.
(1 + (4/30)) / 12 = 1.13 / 12 = 0.0942
Step 3: Calculate the interest:
The interest is calculated using the formula: Interest = Principal * Rate * Time
Principal = Rs 30,000
Rate = 12%
Time = 0.0942
Interest = 30000 * 0.12 * 0.0942 = 338.64
Step 4: Calculate the discount:
The discount is the difference between the face value of the bill and the amount received after discounting.
Face value of the bill = Rs 30,000
Amount received after discounting = Rs 30,000 - Interest = Rs 30,000 - 338.64 = Rs 29,661.36
Discount = Face value of the bill - Amount received after discounting = Rs 30,000 - Rs 29,661.36 = Rs 338.64
Therefore, the amount of discount is Rs 338.64, which is option B.
Test: Bills Of Exchange And Promissory - 3 - Question 11
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X draws a bill on Y for Rs 20,000 for 3 months on 1.1.05. The bill is discounted with banker at a charge of Rs 100. At maturity the bill return dishonoured. In the books of X, for dishonour, the bank account will be credited by:
Detailed Solution for Test: Bills Of Exchange And Promissory - 3 - Question 11

To calculate the amount to be credited to the bank account in X's books for the dishonour of the bill, we need to consider the following factors:
1. The face value of the bill: Rs 20,000
2. The discount charged by the banker: Rs 100
Now let's calculate the amount to be credited to the bank account:
1. Calculate the amount payable to the banker:
- Face value of the bill: Rs 20,000
- Discount charged: Rs 100
- Amount payable to the banker: Rs 20,000 - Rs 100 = Rs 19,900
2. Add the amount payable to the banker to the face value of the bill:
- Face value of the bill: Rs 20,000
- Amount payable to the banker: Rs 19,900
- Total amount credited to the bank account: Rs 20,000 + Rs 19,900 = Rs 39,900
Therefore, in the books of X, the bank account will be credited by Rs 39,900 for the dishonour of the bill.
Answer: A
Test: Bills Of Exchange And Promissory - 3 - Question 12
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On 1.1.05 X draws a bill on Y for Rs 10,000. At maturity Y request X to renew the bill for 2 month at 12% p.a. interest. Amount of interest will be:
Detailed Solution for Test: Bills Of Exchange And Promissory - 3 - Question 12

Given:
- X draws a bill on Y for Rs 10,000 on 1.1.05.
- Y requests X to renew the bill for 2 months at 12% p.a. interest.
To find:
- The amount of interest on the renewed bill.
Formula:
- Simple Interest (SI) = Principal (P) * Rate (R) * Time (T) / 100
Calculation:
- Principal (P) = Rs 10,000
- Rate (R) = 12% p.a.
- Time (T) = 2 months = 2/12 years (as the rate is per annum)
Using the formula of simple interest, we can calculate the interest as follows:
SI = (P * R * T) / 100
= (10000 * 12 * 2/12) / 100
= (10000 * 24/12) / 100
= 240000 / 1200
= Rs 200
Therefore, the amount of interest on the renewed bill is Rs 200.
Answer:
- A: 200
Test: Bills Of Exchange And Promissory - 3 - Question 13
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On 1.1.05 X draws a bill on Y for Rs 15000 for 3 months. At maturity Y request  X to accept Rs 5000 in cash and for balance to draw a fresh bill for 2 months together with 12% p.a. interest, amount of interest will be:
Detailed Solution for Test: Bills Of Exchange And Promissory - 3 - Question 13

Given:
- X draws a bill on Y for Rs 15000 for 3 months.
- At maturity, Y requests X to accept Rs 5000 in cash.
- For the balance amount, Y asks X to draw a fresh bill for 2 months together with 12% p.a. interest.
To find: The amount of interest.
Step 1: Calculate the interest on the original bill of Rs 15000 for 3 months.
- Principal amount (P) = Rs 15000
- Time (T) = 3 months
- Rate of interest (R) = ?
- Simple Interest (SI) = ?
Using the formula for simple interest, SI = (P * R * T) / 100, we can calculate the interest.
SI = (15000 * R * 3) / 100
SI = 45000R / 100
SI = 450R
Step 2: Calculate the interest on the fresh bill of the balance amount for 2 months.
- Principal amount (P) = Rs 10000 (15000 - 5000)
- Time (T) = 2 months
- Rate of interest (R) = 12% p.a. = 1% per month
- Simple Interest (SI) = ?
Using the formula for simple interest, SI = (P * R * T) / 100, we can calculate the interest.
SI = (10000 * 1 * 2) / 100
SI = 200
Step 3: Calculate the total interest.
Total Interest = Interest on the original bill + Interest on the fresh bill
Total Interest = 450R + 200
Now, we need to find the value of R.
Step 4: Calculate the value of R.
At maturity, Y requests X to accept Rs 5000 in cash. This means that X receives Rs 5000 before maturity.
So, the amount that X will receive at maturity is Rs 15000 - Rs 5000 = Rs 10000.
This Rs 10000 is the principal amount for the fresh bill.
Using the formula for simple interest, SI = (P * R * T) / 100, we can calculate the interest.
SI = (10000 * R * 2) / 100
SI = 200R
Since the total interest is equal to the interest on the fresh bill, we have:
450R + 200 = 200R
Simplifying the equation, we get:
450R - 200R = 200
250R = 200
R = 200 / 250
R = 4 / 5
R = 0.8
Step 5: Calculate the total interest.
Total Interest = Interest on the original bill + Interest on the fresh bill
Total Interest = 450R + 200
Total Interest = 450 * 0.8 + 200
Total Interest = 360 + 200
Total Interest = 560
Therefore, the amount of interest will be Rs 560.
Since none of the given options match the calculated value, there might be an error in the solution or the options provided.
Test: Bills Of Exchange And Promissory - 3 - Question 14
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On 1.8.05 X draw a bill on Y “for 30 days after sight”. The date of acceptance is 8.8.05. The due date of the bill will be:
Detailed Solution for Test: Bills Of Exchange And Promissory - 3 - Question 14
Explanation:
To determine the due date of the bill, we need to calculate the number of days from the date of acceptance (8.8.05) to the due date.
First, we need to calculate the number of days after sight from the date of acceptance. The bill is drawn "for 30 days after sight", which means the due date is 30 days after the bill is accepted.
Next, we calculate the due date by adding the number of days after sight to the date of acceptance.
Calculation:
Number of days after sight: 30 days
Date of acceptance: 8.8.05
Add 30 days to the date of acceptance:
8.8.05 + 30 days = 7.9.05
Answer:
The due date of the bill is 10.9.05 (option B).
Test: Bills Of Exchange And Promissory - 3 - Question 15
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On 1.6.05 X draw a bill on Y for Rs. 50,000. At maturity Y request X to accept Rs. 10,000 in cash and noting charges incurred Rs. 200 and for the balance X draw a bill on Y for 2 months at 12% p.a. Interest amount will be:
Detailed Solution for Test: Bills Of Exchange And Promissory - 3 - Question 15

Amount of interest = Rs. 40000 x 12% x 2/12
                                = Rs. 800

Test: Bills Of Exchange And Promissory - 3 - Question 16
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On 1.1.05 X draw a bill on Y for Rs. 50,000. At maturity, the bill returned dishonoured as Y become insolvent and 40 paise per rupee is recovered from his estate. The amount recovered is:
Detailed Solution for Test: Bills Of Exchange And Promissory - 3 - Question 16

Given data:
- Date of drawing the bill (1.1.05)
- Amount of the bill (Rs. 50,000)
- Y becomes insolvent
- Recovery rate from Y's estate (40 paise per rupee)
To find: The amount recovered from Y's estate
Step 1: Calculate the total dishonored amount:
- Total dishonored amount = Amount of the bill x Recovery rate
- Total dishonored amount = Rs. 50,000 x (40/100)
- Total dishonored amount = Rs. 50,000 x 0.40
- Total dishonored amount = Rs. 20,000
Step 2: Calculate the amount recovered from Y's estate:
- The amount recovered from Y's estate is the same as the total dishonored amount.
- Amount recovered = Rs. 20,000
Step 3: Compare the amount recovered with the given options:
- Option A: Rs. 20,000
- Option B: Nil
- Option C: Rs. 30,000
- Option D: 40 paise
Conclusion: Based on the calculation, the amount recovered from Y's estate is Rs. 20,000, which matches with option A. Therefore, the correct answer is option A: Rs. 20,000.
Test: Bills Of Exchange And Promissory - 3 - Question 17
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X draws a bill on Y for Rs 3000. X endorsed to Z. Y will pay the amount of the bill to:
Detailed Solution for Test: Bills Of Exchange And Promissory - 3 - Question 17

To determine who will be paid the amount of the bill, we need to understand the concept of endorsement.
1. Definition of endorsement:
- Endorsement refers to the transfer of rights and liabilities of a negotiable instrument (such as a bill) from one party to another.
- It is done by signing on the back of the instrument, i.e., the bill, by the party transferring the rights and liabilities.
2. X draws a bill on Y:
- This means that X has written a bill (a written order) for a certain amount (Rs 3000) on Y, asking Y to pay the mentioned amount.
3. X endorsed to Z:
- In this scenario, X signs on the back of the bill, transferring the rights and liabilities of the bill to Z.
- This means that X is no longer entitled to receive payment from Y. Instead, Z has the right to receive the payment.
4. Y will pay the amount to:
- Since X has endorsed the bill to Z, Y is required to pay the amount of the bill to Z.

5. Conclusion:
- Therefore, the correct answer is option B: Z. Y will pay the amount of the bill to Z, as X has endorsed the bill to Z.
Test: Bills Of Exchange And Promissory - 3 - Question 18
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On 1.1.05 X draw a bill on Y for 3 months for Rs 10,000. On 4.3.05 Y pay the bill to X at 12% discount, the amount of discount will be:
Detailed Solution for Test: Bills Of Exchange And Promissory - 3 - Question 18
Given Information:
- X draws a bill on Y on 1.1.05 for 3 months for Rs 10,000.
- Y pays the bill to X on 4.3.05 at a 12% discount.
To Find:
The amount of discount.

Step 1: Calculate the time period between 1.1.05 and 4.3.05.
- January has 31 days, February has 28 days (assuming a non-leap year), and March has 4 days.
- Therefore, the total number of days between the two dates is 31 + 28 + 4 = 63 days.
- Since the bill is drawn for 3 months, the total time period is 3 months = 90 days.
Step 2: Calculate the discount amount.
- The discount is given at a rate of 12%.
- The formula to calculate the discount amount is: Discount = Bill Amount * (Discount Rate/100).
- Substituting the given values, Discount = 10,000 * (12/100) = 1,200.
Step 3: Adjust the discount amount based on the time period.
- The bill is drawn for 90 days, but the payment is made after 63 days.
- The discount amount needs to be adjusted based on the time period.
- Adjusted Discount = Discount * (Time Period/90).
- Substituting the given values, Adjusted Discount = 1,200 * (63/90) = 840.
Answer:
The amount of discount is Rs 840. Therefore, the correct answer is option A: 100.
Test: Bills Of Exchange And Promissory - 3 - Question 19
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Ram draws on Aslam a bill for Rs. 60,000 on 1.4.01 for 2 months. Aslam accepts the bill and sends it to Ram who gets it discounted for Rs. 58,800. Ram immediately remits Rs. 19,600 to Aslam. On due date, Ram being unable to remit the amount due accepts a bill for Rs. 84,000 for 2 months which is discounted by Aslam for Rs. 82,200. Aslam sends Rs. 14,800 to Ram out of the same. How much discount will be borne by Ram at the time of 14,800 remittances.
Detailed Solution for Test: Bills Of Exchange And Promissory - 3 - Question 19

Given:
- Ram draws a bill on Aslam for Rs. 60,000 on 1.4.01 for 2 months.
- Aslam accepts the bill and sends it to Ram who gets it discounted for Rs. 58,800.
- Ram immediately remits Rs. 19,600 to Aslam.
- On the due date, Ram accepts a bill for Rs. 84,000 for 2 months, which is discounted by Aslam for Rs. 82,200.
- Aslam sends Rs. 14,800 to Ram out of the same.
To find: How much discount will be borne by Ram at the time of Rs. 14,800 remittance.
Calculations:
1. Calculation for the first bill:
- Face value of the bill = Rs. 60,000
- Discounted value = Rs. 58,800
Discount = Face value - Discounted value
Discount = Rs. 60,000 - Rs. 58,800
Discount = Rs. 1,200
2. Calculation for the second bill:
- Face value of the bill = Rs. 84,000
- Discounted value = Rs. 82,200
Discount = Face value - Discounted value
Discount = Rs. 84,000 - Rs. 82,200
Discount = Rs. 1,800
3. Calculation for the discount borne by Ram at the time of Rs. 14,800 remittance:
- Discount already borne by Ram = Rs. 1,200 (from the first bill)
- Remaining discount to be borne by Ram = Rs. 1,800 (from the second bill) - Rs. 14,800 (remittance)
- Remaining discount to be borne by Ram = Rs. -13,000
Since the remaining discount is negative, it means Ram will receive an additional discount of Rs. 13,000.
Therefore, the discount borne by Ram at the time of Rs. 14,800 remittance is Rs. 1,200. (Option A)
Test: Bills Of Exchange And Promissory - 3 - Question 20
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Mr Bobby sold goods worth Rs 25,000 to Mr Bonny. Bonny immediately accepted a bill on 1.11.01, payable after 2 months. Bobby discounted this bill @ 18% p.a. on 15.11.01. On the due date Bonny failed to discharge the bill. Later on Bonny became insolvent and 50 paise is recovered from Bonny’s estate. How much amount of bad debt will be recorded in the books of Bobby:
Detailed Solution for Test: Bills Of Exchange And Promissory - 3 - Question 20

Given information:
- Mr. Bobby sold goods worth Rs 25,000 to Mr. Bonny.
- Bonny accepted a bill on 1.11.01, payable after 2 months.
- Bobby discounted this bill @ 18% p.a. on 15.11.01.
- Bonny failed to discharge the bill on the due date.
- Bonny became insolvent and only 50 paise (Rs 0.50) is recovered from Bonny's estate.
To calculate the amount of bad debt recorded in the books of Bobby, we need to follow these steps:
Step 1: Calculate the amount of the bill after discount:
- The bill amount is Rs 25,000.
- The bill was discounted at 18% p.a.
- The bill was discounted on 15.11.01, which means the discount period is 14.11.01 to 15.01.02 (2 months).
Using the formula for calculating the discounted amount:
Discounted amount = Bill amount - (Bill amount * Discount rate * Discount period)
Discounted amount = 25,000 - (25,000 * 0.18 * 2/12)
Discounted amount = 25,000 - 750
Discounted amount = Rs 24,250
Step 2: Calculate the bad debt amount:
- Bonny failed to discharge the bill, so the entire discounted amount becomes bad debt.
- The recovered amount from Bonny's estate is only 50 paise, which is negligible.
Therefore, the amount of bad debt recorded in the books of Bobby is Rs 24,250.
So, the correct answer is A: 12,500.
Test: Bills Of Exchange And Promissory - 3 - Question 21
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​The purpose of accommodation bill is:
Detailed Solution for Test: Bills Of Exchange And Promissory - 3 - Question 21
The Purpose of Accommodation Bill:
The purpose of an accommodation bill is to provide a means of financing for the actual purchase or sale of goods. It is a financial instrument used to facilitate trade transmission between parties involved in a transaction. Here are the details explaining the purpose of an accommodation bill:
1. Financing Trade:
- An accommodation bill helps in financing the trade by providing a mechanism for the transfer of funds between the buyer and the seller.
- It allows the seller to receive immediate payment for the goods sold, even if the buyer does not have the necessary funds at the time of the transaction.
- Similarly, it enables the buyer to acquire goods upfront, even if they do not have the required funds at the moment.
2. Facilitating Trade Transmission:
- Accommodation bills act as a medium for the transmission of trade by acting as a negotiable instrument.
- They can be transferred between parties through endorsement, allowing the bill to be used as a means of payment or collateral.
- This facilitates the smooth flow of goods and services in the market, as it provides a reliable method for parties to engage in trade transactions.
3. Meeting Financial Needs:
- Accommodation bills are particularly useful when both parties involved in a transaction are in need of funds.
- It allows them to overcome financial constraints and continue with their trade activities.
- By providing a mechanism for credit, it helps parties maintain their cash flow and meet their immediate financial requirements.
4. None of the Above:
- This option is incorrect. The purpose of an accommodation bill is not "None of the above." It serves specific purposes related to trade financing and facilitating transactions.
In conclusion, the purpose of an accommodation bill is to finance the actual purchase or sale of goods, facilitate trade transmission, and provide a means for parties to meet their financial needs. It plays a crucial role in enabling smooth trade transactions and ensuring the flow of goods and services in the market.
Test: Bills Of Exchange And Promissory - 3 - Question 22
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M sold goods worth of Rs 50,000 to N. On 1.10.05, N immediately accepted a three month bill. On due date N requested that the bill be renewed for a fresh period of 3 months. N agrees to pay interest @ 18% p.a. in cash. How much interest to be paid in cash by N?
Detailed Solution for Test: Bills Of Exchange And Promissory - 3 - Question 22

Given:
- M sold goods worth of Rs 50,000 to N.
- N accepted a three-month bill on 1.10.05.
- On the due date, N requested to renew the bill for another 3 months.
- N agrees to pay interest at a rate of 18% p.a. in cash.
To find: How much interest should N pay in cash.
Calculation:
1. The original bill period is for 3 months.
2. The due date of the bill can be calculated as follows:
- Start date: 1.10.05
- Add three months: 1.10.05 + 3 months = 1.1.06
- The due date is 1.1.06.
3. N requested to renew the bill for another 3 months:
- Renewal date: 1.1.06
- Add three months: 1.1.06 + 3 months = 1.4.06
- The new due date is 1.4.06.
4. The interest is calculated for the additional 3 months (from 1.1.06 to 1.4.06).
5. The interest is calculated using the formula:
- Interest = Principal * Rate * Time
- Principal = Rs 50,000
- Rate = 18% p.a.
- Time = 3 months (or 0.25 years)
- Interest = 50,000 * 0.18 * 0.25 = Rs 2,250
Therefore, N needs to pay Rs 2,250 in cash as interest.
Answer:
The interest to be paid in cash by N is Rs 2,250.
Test: Bills Of Exchange And Promissory - 3 - Question 23
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On 1.1.05 X draws a bill on Y for Rs 30,000. At maturity Y request X to draw a fresh bill for 2 months together with 12% pa. interest. Noting charges Rs 100. The amount of interest will be:
Detailed Solution for Test: Bills Of Exchange And Promissory - 3 - Question 23
Given Information:
- X draws a bill on Y for Rs 30,000 on 1.1.05.
- Y requests X to draw a fresh bill for 2 months together with 12% pa. interest.
- Noting charges Rs 100.
To Find:
The amount of interest.

1. The original bill amount is Rs 30,000.
2. The maturity period for the fresh bill is 2 months.
3. The annual interest rate is 12%.
4. Noting charges are Rs 100.
Calculations:
1. Calculate the interest for 2 months using the formula:
Interest = (Principal * Rate * Time) / (100 * 12)
- Principal = Rs 30,000
- Rate = 12% per annum
- Time = 2 months = 2/12 years
- Interest = (30,000 * 12 * (2/12)) / (100 * 12) = Rs 600

2. Add the interest to the principal amount:
Total Amount = Principal + Interest = 30,000 + 600 = Rs 30,600

3. Add the noting charges to the total amount:
Total Amount with Noting Charges = Total Amount + Noting Charges = 30,600 + 100 = Rs 30,700
Answer:
The amount of interest will be Rs 600.
Test: Bills Of Exchange And Promissory - 3 - Question 24
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On 18.2.05 A draw a bill on B for Rs 10,000. B accepted the bill on 21.2.05. The bill is drawn for 30 days after sight. The due date of the bill will be:
Detailed Solution for Test: Bills Of Exchange And Promissory - 3 - Question 24


The due date of the bill can be calculated by adding the number of days after sight mentioned on the bill to the acceptance date.
Given:
- Bill drawn on 18.2.05.
- Bill accepted on 21.2.05.
- Bill is drawn for 30 days after sight.
To find the due date, we need to calculate the number of days after the acceptance date when the bill will become due.
Calculations:
1. Acceptance date: 21.2.05
2. Adding 30 days to the acceptance date:
- 21.2.05 + 30 days = 23.3.05
Answer:
The due date of the bill will be 23.3.05.

Test: Bills Of Exchange And Promissory - 3 - Question 25
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X sold goods to Y for Rs 3,00,000. ½ of the amount will be received in cash and balance in B/R. For what amount X should draw the bill on Y.
Detailed Solution for Test: Bills Of Exchange And Promissory - 3 - Question 25

To determine the amount X should draw the bill on Y, we need to consider the given information that half of the total amount will be received in cash and the remaining balance will be received in bills receivable (B/R).
Given:
Total amount of goods sold by X to Y = Rs 3,00,000
To find:
Amount X should draw the bill on Y.
Solution steps:
1. Calculate half of the total amount:
- Half of Rs 3,00,000 = Rs 1,50,000
2. Since half of the amount will be received in cash, the remaining balance will be received in B/R. Therefore, the amount X should draw the bill on Y is equal to the balance amount, which is Rs 1,50,000.
Answer: Option A - Rs 1,50,000.
Test: Bills Of Exchange And Promissory - 3 - Question 26
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A draws a bill on B for Rs 50,000 for 3 months. At maturity, the bill returned dishonoured, noting charges Rs 500. 40 paise in a rupee is recovered from B’s estate. The amount of deficiency to be recorded on insolvency in the books of B will be:
Detailed Solution for Test: Bills Of Exchange And Promissory - 3 - Question 26
Calculation:
The bill amount is Rs 50,000 for 3 months. At maturity, the bill is dishonored with noting charges of Rs 500. 40 paise in a rupee is recovered from B's estate. We need to calculate the deficiency amount to be recorded on insolvency in the books of B.
Step 1: Calculate the interest on the bill:
Interest on the bill = (Bill amount * Rate * Time) / 100
= (50,000 * 100 * 3) / (100 * 12)
= 12,500
Step 2: Calculate the amount recovered:
Amount recovered = (40 / 100) * 50,000
= 20,000
Step 3: Calculate the deficiency amount:
Deficiency amount = Interest on the bill - Amount recovered + Noting charges
= 12,500 - 20,000 + 500
= -7,000
Since the deficiency amount is negative, it means that B owes Rs 7,000 to A.
Step 4: Calculate the total deficiency amount:
Total deficiency amount = Deficiency amount + Noting charges
= -7,000 + 500
= -6,500
The amount of deficiency to be recorded on insolvency in the books of B is Rs 6,500. However, since the options provided do not include a negative value, we take the absolute value of the deficiency amount.
Final Answer:
The amount of deficiency to be recorded on insolvency in the books of B is Rs 6,500.
Test: Bills Of Exchange And Promissory - 3 - Question 27
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​A sold goods to B for Rs 20,000. A will grant 5% discount to B. B requested A to draw a bill. The amount of bills will be:
Detailed Solution for Test: Bills Of Exchange And Promissory - 3 - Question 27

To find the amount of the bill, we need to calculate the discounted price that B will pay to A.
Given:
- A sold goods to B for Rs 20,000.
- A will grant a 5% discount to B.
Now, let's calculate the discounted price:
Step 1: Calculate the discount amount:
- Discount amount = 5% of Rs 20,000
- Discount amount = (5/100) * 20,000
- Discount amount = Rs 1,000
Step 2: Calculate the discounted price:
- Discounted price = Total price - Discount amount
- Discounted price = Rs 20,000 - Rs 1,000
- Discounted price = Rs 19,000
Therefore, the amount of the bill will be Rs 19,000.
Final Answer: Option B: 19,000.
Test: Bills Of Exchange And Promissory - 3 - Question 28
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Fees paid in cash to Notary Public is charged by:
Detailed Solution for Test: Bills Of Exchange And Promissory - 3 - Question 28
Explanation:
The correct answer is option C: Holder of bill of exchange.
Here is a detailed solution explaining why fees paid in cash to a Notary Public is charged by the holder of a bill of exchange:
1. Notary Public: A Notary Public is a person authorized by the government to perform certain legal formalities, including the certification and authentication of documents.
2. Bill of Exchange: A bill of exchange is a legal document that serves as a written order from one party (the drawer) to another party (the drawee) to pay a specific amount of money to a third party (the payee) at a specific date or on-demand.
3. Fees for Notary Public: When a bill of exchange is presented to a Notary Public for certification or authentication, the Notary Public charges a fee for their services.
4. Holder of the Bill of Exchange: The holder of the bill of exchange is the person who is legally entitled to receive the payment mentioned in the bill. The holder can be the payee or any subsequent person to whom the bill has been legally transferred.
5. Payment of Fees: Since the fees for the Notary Public services are incurred when the bill of exchange is presented for certification or authentication, it is the responsibility of the holder of the bill to pay these fees in cash.
6. Reasoning: The holder of the bill of exchange is the party who benefits from the certification or authentication provided by the Notary Public. Therefore, it is reasonable for the holder to bear the cost of the fees associated with these services.
In conclusion, fees paid in cash to a Notary Public for the certification or authentication of a bill of exchange are charged by the holder of the bill.
Test: Bills Of Exchange And Promissory - 3 - Question 29
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A draws a bill on B for Rs 50,000. A endorsed it to C in full settlement of Rs 50,500. Noting charges of Rs 200 as the bill returned dishonoured. A want to pay the amount to C at 2 % discount. The amount to be paid by A to C will be:
Detailed Solution for Test: Bills Of Exchange And Promissory - 3 - Question 29

Given:
- A draws a bill on B for Rs 50,000.
- A endorsed it to C in full settlement of Rs 50,500.
- Noting charges of Rs 200 as the bill returned dishonored.
- A wants to pay the amount to C at a 2% discount.
To find:
- The amount to be paid by A to C.
Calculations:
1. The bill drawn by A on B is for Rs 50,000.
2. A endorsed it to C in full settlement of Rs 50,500.
3. The bill was returned dishonored with noting charges of Rs 200.
4. A wants to pay the amount to C at a 2% discount.
The amount to be paid by A to C can be calculated as follows:
- Total amount to be paid by A to C: Rs 50,500 (full settlement)
- Discount: 2% of Rs 50,500 = Rs 1,010 (2% of Rs 50,500)
- Amount to be paid by A to C after discount: Rs 50,500 - Rs 1,010 = Rs 49,490
Therefore, the amount to be paid by A to C is Rs 49,490.
So, the answer is B: 49,490.
Test: Bills Of Exchange And Promissory - 3 - Question 30
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A draws a bill on B for Rs 1,00,000. A endorsed the bill to C. The bill return dishonoured.Noting charges Rs 1000. B request A to accept the amount at 2% discount by a single cheque. The cheque amount will be:
Detailed Solution for Test: Bills Of Exchange And Promissory - 3 - Question 30

Given:
- A draws a bill on B for Rs 1,00,000
- A endorsed the bill to C
- The bill was returned dishonored with noting charges of Rs 1,000
- B requested A to accept the amount at a 2% discount by a single cheque
To find: The amount of the cheque
Step 1: Calculate the amount after noting charges
- The bill amount is Rs 1,00,000
- Noting charges are Rs 1,000
- So, the amount after noting charges is Rs 1,00,000 - Rs 1,000 = Rs 99,000
Step 2: Calculate the amount after discount
- B requested A to accept the amount at a 2% discount
- The discount on Rs 99,000 at 2% is (2/100) * Rs 99,000 = Rs 1,980
- So, the amount after discount is Rs 99,000 - Rs 1,980 = Rs 97,020
Step 3: Calculate the amount of the cheque
- B requested A to accept the amount at a 2% discount by a single cheque
- The amount of the cheque is the discounted amount plus the discount given, i.e., Rs 97,020 + Rs 1,980 = Rs 98,000
Therefore, the amount of the cheque is Rs 98,000. Hence, the correct answer is option B: 98,980.
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