## 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**

## Important Questions of Class 11 Accountancy Bill of Exchange

**Bill of Exchange**

- If the acceptor of the bill refuses to pay the bill on maturity, what is it called?
- Name any two types of commonly used negotiable instruments.
- What is noting of a bill of exchange?
- Explain briefly the procedure of calculating the date of maturity of a bill of exchange. Give example.
- Differentiate between bill of exchange and a promissory note.
- 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.
- 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.
- 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.
- 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. - 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**

- 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.
- 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.
- Noting of a Bill means getting the Bill notified and presented on its dishonour with the Notary Public.
- 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 1^{st}Sept. 2008, payable after three months, then the due date or nominal date is 1^{st}Dec. 2008 while the bill is legally due on 4^{th}Dec. 2008. - The difference between a bill of exchange and promissory note are as follows:
**Basis****Bill of Exchange****Promissory Note****Drawer**Creditor is the Drawer. Debtor is the Drawer. **Order or Promise and Parties**It 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. **Acceptance**t requires acceptance by the drawee or someone else on his behalf. It does not require any acceptance. **Payee**Drawer and payee can be the same party. Drawer cannot be the payee of it. **Copies**In 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. **Liability**The liability of the drawer arises only if the acceptor does not pay. The promisor has the primary liability to pay. **Stamps**Stamps 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. **Noting**In case of Dishonour, it is better to get it noted for non-payment. In the case of promissory note noting is necessary. **P’s JOURNAL****Date****Particulars****L/F****Debit****Amount****(Rs)****Credit****Amount****(Rs)**2015 Feb 1 Q’s A/c To Sales A/c

(Being goods sold on credit)

Dr 36,000 36,000 Feb 1 Bills 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 1 R’s A/c To Bills Receivable (No. 1) A/c

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

Dr 15,000 15,000 Feb 4 Bank 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 30 Bills Sent for Collection A/c To Bill Receivable (No. 3) A/c

(Being the bill sent to the bank for collection)

Dr 9,000 9,000 May 4 Bank 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 **Total****1,17,000****======****1,17,000****======****Working Note**Calculation of Discount {tex}= 12,000 \times \frac { 12 } { 100 } \times \frac { 2 } { 12 } = 240{/tex}**Q’s JOURNAL****Date****Particulars****L/F****Debit****Amount****(Rs)****Credit****Amount****(Rs)**2015 Feb 1 Purchases A/c To P’s A/c

(Being the goods purchased on credit)

Dr 36,000 36,000 Feb 1 P’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)

Dr 36,000 15,000 12,000

9,000

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

(Being the bill met on maturity)

Dr 15,000 15,000 Apr 4 Bills Payable (No 2) A/c To Cash A/c

(Being the bill met on maturity)

Dr 12,000 12,000 May 4 Bills Payable (No. 3) A/c To Cash A/c

(Being the bill met on maturity)

Dr 9,000 9,000 **Total****1,08,000****========****1,08,000****=======****BOOKS OF A****JOURNAL ENTRIES****Date****Particulars****L/F****(Rs.)****(Rs.)**1.1.18 B/R A/c Dr. 3,900 Discount Allowed A/c Dr. 100 To B

(Being a bill drawn.)4,000 4.4.18 B Dr. 4,050 To B/R A/c 3,900 To Discount Allowed A/c 100 To Cash A/c

(Being bill dishonour & nothing charges paid)50 **BOOKS OF B****JOURNAL ENTRIES****Date****Particulars****L/F****(Rs.)****(Rs.)**1.1.18 A Dr. 4,000 To B/P A/c 3,900 To Discount Received A/c

(Being bill accepted.)100 4.4.18 B/P A/c Dr. 3,900 Nothing Charges A/c Dr. 50 Discount Received A/c Dr. 100 To A

(Being bill dishonoured.)4,050 **In the Books of X****JOURNAL****Date****Particulars****L/F****Debit****Amount****(Rs)****Credit****Amount****(Rs)**Jan 1 Y’sA/c To Sales A/c

(Being the goods sold to Y on credit)

Dr 1,00,000 1,00,000 Jan 1 Bills Receivable A/c To Y’s A/c

(Being the acceptance of the bill received from Y)

Dr 1,00,000 1,00,000 Feb 1 Z’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)

Dr 1,02,000 1,00,000 2,000

**Total****3,02,000****======****3,02,000****=======****In the Books of Y****JOURNAL****Date****Particulars****L/F****Debit****Amount****(Rs)****Credit****Amount****(Rs)**Jan 1 Purchases A/c To X’s A/c

(Being goods purchased on credit from X)

Dr 1,00,000 1,00,000 Jan 1 X’s A/c To Bills Payable A/c

(Being the acceptance of the bill given to X)

Dr 1,00,000 1,00,000 Feb 4 Bill Payable A/c To Bank A/c

(Being the bill discharged)

Dr 1,00,000 1,00,000 **Total****3,00,000****=======****3,00,000****======****In the Books of Z****JOURNAL****Date****Particulars****L/F****Debit****Amount****(Rs)****Credit****Amount****(Rs)**Feb 1 Bills 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 4 Bank A/c To Bills Receivable A/c

(Being the bill collected on due date)

Dr 1,00,000 1,00,000 **Total****2,02,000****=======****2,02,000****=======****JOURNAL ENTRIES IN THE BOOKS OF X****Date****Particulars****L/F****(Rs.)****(Rs.)**Jan. 1 Y Dr. 40,000 To Sales A/c 40,000 (Being goods sold.) Jan. 1 Bill Receivable A/c Dr. 40,000 To Y 40,000 (Being Bill Receivable drown.) Jan. 4 Bank A/c Dr. 39,400 Discount A/c [40,000{tex}\times{/tex}6%{tex}\times{/tex}(3/12)] Dr. 600 To Bill Receivable A/c 40,000 (Being Bill Receivable discounted with bank) April 4 Y Dr. 40,200 To Bank A/c 40,200 (Being Bill Receivable dishonoured on due date) April 4 Y [40,000{tex}\times{/tex}(12%){tex}\times{/tex}(3/12)] Dr. 1,200 To Interest A/c 1,200 (Being interest charged at 12% p.a.) April 4 Bill Receivable A/c [40,200+1,200] Dr. 41,400 To Y 41,400 (Being new Bill Receivable with interest drown) **In the Books of Rashmi****JOURNAL****Date****Particulars****L.F.****Amount (Dr)****Amount (Cr)**2015 Feb 14 Alka Dr 7,500 To Sales A/c 7,500 (Being goods sold to Alka) Feb 14 Cash A/c Dr 500 Bills Receivable A/c Dr 7,000 To Alka 7,500 (Being acceptance received along with Rs. 500 cash) Apr 10 Alka Dr 7,000 To Bills Receivable A/c 7,000 (Being bill cancelled before the due date) Apr 10 Cash A/c Dr 2,000 To Alka 2,000 (Being Rs. 2,000 received) Apr 10 Alka Dr 500 To Interest A/c 500 (Being interest of Rs. 500 due) Apr 10 Bills Receivable A/c Dr 5,500 To Alka 5,500 (Being new bill acceptance received from Alka along with interest) June 13 Cash A/c Dr 5,500 To Bills Receivable A/c 5,500 (Being Bills payment received on maturity) **In the book of Rashmi**

Alka’s Account**Date****Particulars****L.F.****Amount (Rs.)****Date****Particulars****L.F.****Amount (Rs.)**2015 2015 Feb 14 To Sales A/c 7,500 Feb 14 By Cash A/c 500 Apr 10 To Bills Receivable A/c 7,000 Feb 14 By Bills Receivable 7,000 Apr 10 To Interest A/c 500 Apr 10 By Cash A/c 2,000 Apr 12 By Bills Receivable A/c 5,500 __15,000____15,000__**In the Books of Alka****JOURNAL****Date****Particulars****L.F.****Amount (Dr)****Amount (Cr)**2015 Feb 14 Purchases A/c Dr 7,500 To Rashmi 7,500 (Being goods purchased from Rashmi) Feb 14 Rashmi Dr 7,500 To Cash A/c 500 To Bills Payable A/c 7,000 (Being cash Rs. 500 and acceptance for Rs. 7,000 given) Apr 10 Bills Payable A/c Dr 7,000 To Rashmi 7,000 (Being bill cancelled before the due date) Apr 10 Rashmi Dr 2,000 To Cash A/c 2,000 (Being Rs. 2,000 cash paid to her) Apr 10 Interest A/c Dr 500 To Rashmi 500 (Being Rs. 500 interest due for extension of time) Apr 10 Rashmi Dr 5,500 To Bills Payable A/c 5,500 (Being new acceptance given along with interest) June 13 Bills Payable A/c Dr 5,500 To Cash A/c 5,500 (Being bills payable paid on due date) **In the book of Alka**

Rashmi’s Account**Date****Particulars****L.F.****Amount (Rs.)****Date****Particulars****L.F.****Amount (Rs.)**2015 2015 Feb 14 To Cash A/c 500 Feb 14 By Purchase A/c 7,500 Feb 14 To Bills Payable A/c 7,000 Apr 10 By Bills Payable A/c 7,000 Apr 10 To Cash A/c 2,000 Apr 10 By Interest A/c 500 Apr 10 To Bill Payable A/c 5,500 __15,000____15,000__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.

## Class 11 Accountancy Chapter Wise Important Question

## Test Generator

Create Tests with your Name & Logo

Try it Now (Free)