Class 11 Accountancy Bill of Exchange: NCERT Solutions for Question 2
Briefly explain the effects of dishonour and noting of a bill of exchange.
When the acceptor of the bill refuses to pay the amount of the bill on the date of maturity or becomes insolvent, it is called dishonour of the bill of exchange.
To establish the fact that the bill was properly presented and dishonoured, the bill is usually handed over to a person called ‘Notary Public’, appointed by the court. The notary public again presents the dishonoured bill to the acceptor for payment and if the acceptor still refuses to make the payment, the Notary Public notes down the fact of dishonour on the bill itself. Such an act of Notary Public is called ‘Noting’. Dishonour of a bill means refusal to pay or inability to pay by the debtor because of insolvency. In other words, a bill is said to have been dishonoured when the drawee fails to make the payment on the date of maturity. In this situation, liability of the acceptor is restored. When a bill is dishonoured, it is always better if it is certified by a notary which is known as noting.
So, it is an ample proof that a bill is dishonoured which is noted down on the face to it. For this, the noting charges are something known as notary charge or noting charges which may be recovered from the person who is responsible for the dishonour of the bill.
The notary is compulsory in case of foreign bills as required under the law of that country whereas it is not so in case of inland bills. It is done with a view to have proof of dishonouring the bill. So, it is very useful. Notary has to assign reasons for dishonour of a bill along with date of dishonour and charges made by him. It is to be noted that whoever pays the noting charges, ultimately these have to be borne by the drawee.
More Questions From Class 11 Accountancy - Chapter Bill of Exchange
- Q:-
Fill in the blanks:
(i) A bill of exchange is a __________ instrument.
(ii) A bill of exchange is drawn by the __________ upon his __________.
(iii) A promissory note is drawn by __________ in favour of his __________.
(iv) There are __________ parties to a bill of exchange.
(v) There are __________ parties to a promissory note.
(vi) Drawer and __________ can not be the same parties in case of a bill of exchange.
(vii) Bill of exchange in India languages is called __________.
(viii) __________ days of grace are added in terms of the bill to calculate the date of its __________. - Q:-
Write ‘True’ or ‘False’ against each statement regarding a bill of exchange:
(i) A bill of exchange must be accepted by the payee.
(ii) A bill of exchange is drawn by the creditor.
(iii) A bill of exchange is drawn for all cash transaction.
(iv) A bill payable on demand is called Time bill;
(v) The person to whom payment is to be made in a bill or exchange is called payee.
(vi) A negotiable instrument does not require the signature of its maker.
(vii) The hundi Payable at sight is called Darshani hundi.
(viii) A negotiable instrument is not freely transferable.
(ix) Stamping of promissory note is not mandatory.
(x) The time of payment of a negotiable instrument need not be certain. - Q:-
Explain briefly the procedure of calculating the date of maturity of a bill of exchange? Give example.
- Q:-
Briefly explain the benefits of maintaining a Bills Payable Book and state how is its posting is done in the ledger?
- Q:-
Give the meaning of rebate.
- Q:-
Briefly explain the purpose and benefits of retiring a bill of exchange to the debtor and the creditor.
- Q:-
What is meant by maturity of a bill of exchange?
- Q:-
Name the parties to a promissory note.
- Q:-
Give the performa of a Bills Payable Book.
- Q:-
A bill of exchange must contain “an unconditional promise to pay” Do you agree with a statement?
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1. What is the amount of capital with which Mr. Sunrise started business?
2. What are the fixed assets he bought?
3. What is the value of the goods purchased?
4. Who is the creditor and state the amount payable to him?
5. What are the expenses?
6. What is the gain he earned?
7. What is the loss he incurred?
8. Who is the debtor? What is the amount receivable from him?
9. What is the total amount of expenses and losses incurred?
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Match the items given under ‘A’ with the correct items under ‘B’
(i) Closing stock is credited to (a) Trial balance
(ii) Accuracy of book of account is tested by (b) Trading account
(iii) On returning the goods to seller, the buyer sends (c) Credit note
(iv) The financial position is determined by (d) Balance sheet
(v) On receiving the returned goods from the (e) Debit note
buyer, the seller sends - Q:-
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