Bill of Exchange Extra Questions of Class 11 Accountancy

myCBSEguide App

myCBSEguide

Trusted by 70 Lakh Students

Install App

UPES, Dehradun - Enroll Yourself for the Academic Year 2020

Apply Now


Bill of Exchange Extra Questions of Class 11 Accountancy. myCBSEguide has just released Chapter Wise Question Answers for class 11. Accountancy is the process of communicating financial information about a business entity to users such as shareholders and managers. Accountancy describes the duties of an accountant, the person whose job is to keep, inspect and interpret financial accounts. There chapter wise Practice Questions with complete solutions are available for download in myCBSEguide website and mobile app. These Question with solution are prepared by our team of expert teachers who are teaching grade in CBSE schools for years. There are around 4-5 set of solved Accountancy Extra questions from each and every chapter. The students will not miss any concept in these Chapter wise question that are specially designed to tackle Exam. We have taken care of every single concept given in CBSE Class 11 Accountancy syllabus and questions are framed as per the latest marking scheme and blue print issued by CBSE for class 11.

Class 11 Accountancy Extra Questions

Download as PDF

Important Questions of Class 11 Accountancy Bill of Exchange

Bill of Exchange


  1. If the acceptor of the bill refuses to pay the bill on maturity, what is it called?
  2. Name any two types of commonly used negotiable instruments.
  3. What is noting of a bill of exchange?
  4. Explain briefly the procedure of calculating the date of maturity of a bill of exchange. Give example.
  5. Differentiate between bill of exchange and a promissory note.
  6. P draws on Q three bills of exchange for Rs. 15,000, Rs. 12,000 and Rs. 9,000 respectively for goods sold to him on 1st February, 2013. These bills were for a month, 2 months and 3 months, respectively The first bill was endorsed to his creditor R. The second bill was discounted with his bank on 4th February 2013 @12% per annum discount and the third bill was sent to his bank for collection on 30th April. On the due dates, all the bills were duly met by Q. The bank sent the collection advice for the third bill after deducting Rs. 75 as collection charges. Pass the journal entries in the books of P and Q.
  7. B owes A Rs.4,000 on 1st January 2018. B accepts a three mont is bill for Rs.3,900 being in full settlement of the claim. At its due date the bill is dishonoured. Noting charges Rs.50 are paid by A. Give the Journal Entries in the books of A and B.
  8. On 1st January, X sold goods worth Rs. 1,00,000 to Y and drew a bill on Y at 3 months for the amount. Y accepted the bill and returned it to X, who endorsed the bill a month after the acceptance, in favour of a creditor Z in the settlement of his debt for Rs. 1,02,000. The bill is duly honoured at maturity. Pass the necessary journal entries in the books of X, Y and Z.
  9. X sells goods for Rs.40,000 to Y on 1st January 2018 and on the same day draws a bill on Y at three months for the amount. Y accepts it and returns it to X, who discounted it on 4th January 2018 his bank at 6% p.a. The acceptance is dishonoured on the due date and the noting charges were paid by bank being Rs.200.
    On 4th April 2018, Y accepts a new till at three months for the amount then due to X together with interest at 12% p.a.
    Make Journal entries to record these transactions in the books of X.
  10. On 14th February, 2015, Rashmi sold goods worth Rs. 7,500 to Alka. Alka paid Rs. 500 in cash and for the balance accepted a bill of exchange drawn upon her by Rashmi payable after 2 months. On 10th April, 2015, Alka approached Rashmi to cancel the bill since she was short of funds. She further requested Rashmi to accept Rs. 2,000 in cash and draw a new bill for the balance including interest Rs. 500. Rashmi accepted Alka’s request and drew a new bill for the amount due payable after 2 months. The bill was accepted by Alka. The new bill was duly met by Alka on maturity.
    Record the necessary journal entries in the books of Rashmi and Alka and prepare Alka’s account in the books of Rashmi’s and Rashmi’s account in the books of Alka.

Bill of Exchange


Answer

  1. In case the acceptor refuses or not in a position to pay the bill then it is considered as the breach of the promise made at the time of the acceptance and is called dishonour of the bill.
  2. A Negotiable instrument means a promissory note, bill of exchange or cheque either to order or bearer.” Two negotiable instruments are bills of exchange and promissory notes.
  3. Noting of a Bill means getting the Bill notified and presented on its dishonour with the Notary Public.
  4. Maturity refers to the date on which a bill of exchange or promissory note becomes due for payment. In arriving at the maturity date 3 days, known as days of grace must be added to the date on which the period of credit expires.
    However, where the date of maturity is a public holiday e.g. all Sundays, 15 August etc., the instrument will become due on the preceding business day. But when an emergency holiday is declared under the Negotiable Instruments Act, 1881, which happens to be the date of maturity of a bill of exchange, then the date of maturity will be the next working day immediately after the holiday. Example: If a bill of Rs 2 lacs is drawn on 1stSept. 2008, payable after three months, then the due date or nominal date is 1stDec. 2008 while the bill is legally due on 4th Dec. 2008.
  5. The difference between a bill of exchange and promissory note are as follows:
    BasisBill of ExchangePromissory Note
    DrawerCreditor is the Drawer.Debtor is the Drawer.
    Order or Promise and PartiesIt contains an order to make payment. There can be three parties to it viz. the drawer, the drawer and the payee.It contains a promise to make payment. There are only two parties to it viz. the drawer and the payee.
    Acceptancet requires acceptance by the drawee or someone else on his behalf.It does not require any acceptance.
    PayeeDrawer and payee can be the same party.Drawer cannot be the payee of it.
    CopiesIn case of foreign bill, three copies are made, otherwise only one copy is prepared.Only one copy is prepared whether, it is foreign or local.
    LiabilityThe liability of the drawer arises only if the acceptor does not pay.The promisor has the primary liability to pay.
    StampsStamps are not required to be fixed, on the bills payable on demand. However, on the other bills, stamps are required to be fixed.Stamps have to be fixed in any case.
    NotingIn case of Dishonour, it is better to get it noted for non-payment.In the case of promissory note noting is necessary.
  6. P’s JOURNAL

    DateParticularsL/FDebit

    Amount

    (Rs)

    Credit

    Amount

    (Rs)

    2015
    Feb 1Q’s A/c

    To Sales A/c

    (Being goods sold on credit)

    Dr36,00036,000
    Feb 1Bills Receivable (No. 1) A/c

    Bills Receivable (No. 2) A/c

    Bills Receivable (No. 3) A/c

    To Q’s A/c

    (Being the acceptances received)

    Dr

    Dr

    Dr

    15,000

    12,000

    9,000

    36,000
    Feb 1R’s A/c

    To Bills Receivable (No. 1) A/c

    (Being the bill endorsed in favour of creditor, R)

    Dr15,00015,000
    Feb 4Bank A/c

    Discounting Charges A/c

    To Bills Receivable (No. 2) A/c

    (Being the bill discounted with the bank)

    Dr

    Dr

    11,760

    240

    12,000
    Apr 30Bills Sent for Collection A/c

    To Bill Receivable (No. 3) A/c

    (Being the bill sent to the bank for collection)

    Dr9,0009,000
    May 4Bank A/c

    Bank Charges A/c

    To Bills Sent for Collection A/c

    (Being the bill collected by the bank and collection charges deducted)

    Dr

    Dr

    8,925

    75

    9,000
    Total1,17,000

    ======

    1,17,000

    ======

    Working Note Calculation of Discount {tex}= 12,000 \times \frac { 12 } { 100 } \times \frac { 2 } { 12 } = 240{/tex}

    Q’s JOURNAL

    DateParticularsL/FDebit

    Amount

    (Rs)

    Credit

    Amount

    (Rs)

    2015
    Feb 1Purchases A/c

    To P’s A/c

    (Being the goods purchased on credit)

    Dr36,00036,000
    Feb 1P’s A/c

    To Bills Payable (No. 1) A/c

    To Bills Payable (No. 2) A/c

    To Bills Payable (No. 3) A/c

    (Being the acceptances given)

    Dr36,00015,000

    12,000

    9,000

    Mar 4Bills Payable (No. 1) A/c

    To Cash A/c

    (Being the bill met on maturity)

    Dr15,00015,000
    Apr 4Bills Payable (No 2) A/c

    To Cash A/c

    (Being the bill met on maturity)

    Dr12,00012,000
    May 4Bills Payable (No. 3) A/c

    To Cash A/c

    (Being the bill met on maturity)

    Dr9,0009,000
    Total1,08,000

    ========

    1,08,000

    =======

  7. BOOKS OF A

    JOURNAL ENTRIES

    DateParticularsL/F(Rs.)(Rs.)
    1.1.18B/R A/cDr.3,900
    Discount Allowed A/cDr.100
      To B
    (Being a bill drawn.)
    4,000
    4.4.18BDr.4,050
      To B/R A/c3,900
      To Discount Allowed A/c100
      To Cash A/c
    (Being bill dishonour & nothing charges paid)
    50

    BOOKS OF B

    JOURNAL ENTRIES

    DateParticularsL/F(Rs.)(Rs.)
    1.1.18ADr.4,000
      To B/P A/c3,900
      To Discount Received A/c
    (Being bill accepted.)
    100
    4.4.18B/P A/cDr.3,900
    Nothing Charges A/cDr.50
    Discount Received A/cDr.100
      To A
    (Being bill dishonoured.)
    4,050
  8. In the Books of X 

    JOURNAL

    DateParticularsL/FDebit

    Amount

    (Rs)

    Credit

    Amount

    (Rs)

    Jan 1Y’sA/c

    To Sales A/c

    (Being the goods sold to Y on credit)

    Dr1,00,0001,00,000
    Jan 1Bills Receivable A/c

    To Y’s A/c

    (Being the acceptance of the bill received from Y)

    Dr1,00,0001,00,000
    Feb 1Z’s A/c

    To Bills Receivable A/c

    To Discount Received A/c

    (Being a bill of Rs. 1,00,000 endorsed to Z in settlement of Rs. 1,02,000)

    Dr1,02,0001,00,000

    2,000

    Total

    3,02,000

    ======

    3,02,000

    =======

    In the Books of Y

    JOURNAL

    DateParticularsL/FDebit

    Amount

    (Rs)

    Credit

    Amount

    (Rs)

    Jan 1Purchases A/c

    To X’s A/c

    (Being goods purchased on credit from X)

    Dr1,00,0001,00,000
    Jan 1X’s A/c

    To Bills Payable A/c

    (Being the acceptance of the bill given to X)

    Dr1,00,0001,00,000
    Feb 4Bill Payable A/c

    To Bank A/c

    (Being the bill discharged)

    Dr1,00,0001,00,000
    Total3,00,000

    =======

    3,00,000

    ======

    In the Books of Z

    JOURNAL

    DateParticularsL/FDebit

    Amount

    (Rs)

    Credit

    Amount 

    (Rs)

    Feb 1Bills Receivable A/c

    Discount Allowed A/c

    To X’s A/c

    (Being the receipt of a duly endorsed bill)

    Dr

    Dr

    1,00,000

    2,000

    1,02,000
    Apr 4Bank A/c

    To Bills Receivable A/c

    (Being the bill collected on due date)

    Dr1,00,0001,00,000
    Total2,02,000

    =======

    2,02,000

    =======

  9. JOURNAL ENTRIES IN THE BOOKS OF X

    DateParticularsL/F(Rs.)(Rs.)
    Jan. 1YDr.40,000
    To Sales A/c40,000
    (Being goods sold.)
    Jan. 1Bill Receivable A/cDr.40,000
    To Y40,000
    (Being Bill Receivable drown.)
    Jan. 4Bank A/cDr.39,400
    Discount A/c [40,000{tex}\times{/tex}6%{tex}\times{/tex}(3/12)]Dr.600
    To Bill Receivable A/c40,000
    (Being Bill Receivable discounted with bank)
    April 4YDr.40,200
    To Bank A/c40,200
    (Being Bill Receivable dishonoured on due date)
    April 4Y [40,000{tex}\times{/tex}(12%){tex}\times{/tex}(3/12)]Dr.1,200
    To Interest A/c1,200
    (Being interest charged at 12% p.a.)
    April 4Bill Receivable A/c [40,200+1,200]Dr.41,400
    To Y41,400
    (Being new Bill Receivable with interest drown)
  10. In the Books of Rashmi

    JOURNAL

    DateParticularsL.F.Amount (Dr)Amount (Cr)
    2015
    Feb 14AlkaDr7,500
    To Sales A/c7,500
    (Being goods sold to Alka)
    Feb 14Cash A/cDr500
    Bills Receivable A/cDr7,000
    To Alka7,500
    (Being acceptance received along with Rs. 500 cash)
    Apr 10AlkaDr7,000
    To Bills Receivable A/c7,000
    (Being bill cancelled before the due date)
    Apr 10Cash A/cDr2,000
    To Alka2,000
    (Being Rs. 2,000 received)
    Apr 10AlkaDr500
    To Interest A/c500
    (Being interest of Rs. 500 due)
    Apr 10Bills Receivable A/cDr5,500
    To Alka5,500
    (Being new bill acceptance received from Alka along with interest)
    June 13Cash A/cDr5,500
    To Bills Receivable A/c5,500
    (Being Bills payment received on maturity)

    In the book of Rashmi
    Alka’s Account

    DateParticularsL.F.Amount (Rs.)DateParticularsL.F.Amount (Rs.)
    20152015
    Feb 14To Sales A/c7,500Feb 14By Cash A/c500
    Apr 10To Bills Receivable A/c7,000Feb 14By Bills Receivable7,000
    Apr 10To Interest A/c500Apr 10By Cash A/c2,000
    Apr 12By Bills Receivable A/c5,500
    15,00015,000

    In the Books of Alka

    JOURNAL

    DateParticularsL.F.Amount (Dr)Amount (Cr)
    2015
    Feb 14Purchases A/cDr7,500
    To Rashmi7,500
    (Being goods purchased from Rashmi)
    Feb 14RashmiDr7,500
    To Cash A/c500
    To Bills Payable A/c7,000
    (Being cash Rs. 500 and acceptance for Rs. 7,000 given)
    Apr 10Bills Payable A/cDr7,000
    To Rashmi7,000
    (Being bill cancelled before the due date)
    Apr 10RashmiDr2,000
    To Cash A/c2,000
    (Being Rs. 2,000 cash paid to her)
    Apr 10Interest A/cDr500
    To Rashmi500
    (Being Rs. 500 interest due for extension of time)
    Apr 10RashmiDr5,500
    To Bills Payable A/c5,500
    (Being new acceptance given along with interest)
    June 13Bills Payable A/cDr5,500
    To Cash A/c5,500
    (Being bills payable paid on due date)

    In the book of Alka
    Rashmi’s Account

    DateParticularsL.F.Amount (Rs.)DateParticularsL.F.Amount (Rs.)
    20152015
    Feb 14To Cash A/c500Feb 14By Purchase A/c7,500
    Feb 14To Bills Payable A/c7,000Apr 10By Bills Payable A/c7,000
    Apr 10To Cash A/c2,000Apr 10By Interest A/c500
    Apr 10To Bill Payable A/c5,500
    15,00015,000

    Note: Renewal of a bill of exchange means substituting the old bill with a new bill. The purpose of this process is to get extension of time. In such cases, there is no need for getting the bill noted from Notary since the Drawee himself makes a request for cancellation of the bill. Drawer will charge interest for the extension of the time. The amount of interest may be paid in cash or included in the amount of the new bill. It is also possible that the new bill is not for the full amount since the Drawer may be partly paid at the time of renewal.


Test Generator

Test Generator

Create Tests with your Name & Logo

Try it Now (Free)


Leave a Comment