SBSIRCommerce Present
Here are 30 Short Answer Questions (SAQs) with answers based on the *Bill of Exchange* chapter of Accountancy,
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1. **Q1: What is a Bill of Exchange?**
- **a.** A written order for unconditional payment
- **b.** A verbal agreement between parties
- **c.** A written promise for conditional payment
**Answer:** a. A written order for unconditional payment
2. **Q2: Who is the drawer in a Bill of Exchange?**
- **a.** The person who pays the bill
- **b.** The person who draws the bill
- **c.** The bank
**Answer:** b. The person who draws the bill
3. **Q3: Who is the drawee in a Bill of Exchange?**
- **a.** The person on whom the bill is drawn
- **b.** The person who draws the bill
- **c.** The creditor
**Answer:** a. The person on whom the bill is drawn
4. **Q4: Who is the payee in a Bill of Exchange?**
- **a.** The person who pays the bill
- **b.** The person to whom payment is made
- **c.** The person who draws the bill
**Answer:** b. The person to whom payment is made
5. **Q5: What is the tenure of a Bill of Exchange called?**
- **a.** Maturity period
- **b.** Usance period
- **c.** Grace period
**Answer:** b. Usance period
6. **Q6: What are the extra three days given after the maturity date of a bill called?**
- **a.** Maturity period
- **b.** Usance period
- **c.** Grace days
**Answer:** c. Grace days
7. **Q7: When is a bill considered to be "Dishonored"?**
- **a.** When the drawee refuses to accept or pay
- **b.** When the drawer accepts it
- **c.** When the bank pays it
**Answer:** a. When the drawee refuses to accept or pay
8. **Q8: Which party can endorse a Bill of Exchange?**
- **a.** Drawer
- **b.** Drawee
- **c.** Payee
**Answer:** c. Payee
9. **Q9: What is meant by "Noting" in the context of a dishonored bill?**
- **a.** Recording of bill details by the bank
- **b.** A formal recording of dishonor
- **c.** Payment of the bill
**Answer:** b. A formal recording of dishonor
10. **Q10: Which authority is approached for noting the dishonor of a bill?**
- **a.** Payee
- **b.** Notary Public
- **c.** Bank
**Answer:** b. Notary Public
11. **Q11: What is an “Accommodation Bill”?**
- **a.** A bill for accommodation of goods
- **b.** A bill drawn for mutual financial help without consideration
- **c.** A bill accepted by the bank
**Answer:** b. A bill drawn for mutual financial help without consideration
12. **Q12: What does "Discounting of a Bill" mean?**
- **a.** Paying the bill on time
- **b.** Selling the bill to a bank before maturity at a discount
- **c.** Dishonoring the bill
**Answer:** b. Selling the bill to a bank before maturity at a discount
13. **Q13: Who is liable for payment on the maturity of a bill?**
- **a.** Drawer
- **b.** Drawee
- **c.** Endorser
**Answer:** b. Drawee
14. **Q14: What is "Acceptance" of a bill?**
- **a.** When the payee accepts the payment
- **b.** When the drawee agrees to the bill
- **c.** When the drawer acknowledges the bill
**Answer:** b. When the drawee agrees to the bill
15. **Q15: What is the "Maturity Date" of a bill?**
- **a.** Date of drawing the bill
- **b.** Date on which the bill is payable
- **c.** Date when the bill is endorsed
**Answer:** b. Date on which the bill is payable
16. **Q16: What is an "Inland Bill"?**
- **a.** A bill drawn within the same country
- **b.** A bill drawn on a foreign party
- **c.** A bill drawn by a bank
**Answer:** a. A bill drawn within the same country
17. **Q17: What is a "Foreign Bill"?**
- **a.** A bill drawn on a party in the same country
- **b.** A bill drawn on a party outside the country
- **c.** A bill drawn by the government
**Answer:** b. A bill drawn on a party outside the country
18. **Q18: Which party is responsible for “Noting” charges?**
- **a.** Drawer
- **b.** Drawee
- **c.** Endorser
**Answer:** a. Drawer
19. **Q19: What is "Renewal of a Bill"?**
- **a.** Extension of payment time after maturity
- **b.** Dishonoring a bill
- **c.** Payment of the bill on time
**Answer:** a. Extension of payment time after maturity
20. **Q20: When is a Bill of Exchange termed as "Settled"?**
- **a.** When it is endorsed
- **b.** When the payment is made on maturity
- **c.** When it is discounted
**Answer:** b. When the payment is made on maturity
21. **Q21: What is the purpose of drawing a Bill of Exchange?**
- **a.** To keep a record of goods sold
- **b.** To provide evidence of credit transactions
- **c.** To secure a loan
**Answer:** b. To provide evidence of credit transactions
22. **Q22: What is the meaning of "Retiring a Bill"?**
- **a.** Settling the bill before the due date
- **b.** Dishonoring the bill
- **c.** Accepting a new bill
**Answer:** a. Settling the bill before the due date
23. **Q23: Who bears the discounting charges in case of a discounted bill?**
- **a.** Drawee
- **b.** Drawer
- **c.** Bank
**Answer:** b. Drawer
24. **Q24: What is the accounting treatment for a dishonored bill?**
- **a.** Credit drawee’s account
- **b.** Debit drawee’s account
- **c.** Credit drawer’s account
**Answer:** b. Debit drawee’s account
25. **Q25: Which act governs the Bill of Exchange in India?**
- **a.** Companies Act, 2013
- **b.** Indian Contract Act, 1872
- **c.** Negotiable Instruments Act, 1881
**Answer:** c. Negotiable Instruments Act, 1881
26. **Q26: Can a Bill of Exchange be transferred?**
- **a.** No, it cannot be transferred
- **b.** Yes, through endorsement
- **c.** Only through legal proceedings
**Answer:** b. Yes, through endorsement
27. **Q27: What is "Endorsement in Full"?**
- **a.** When the payee transfers the bill to a specific person
- **b.** When the bill is fully paid
- **c.** When the bill is dishonored
**Answer:** a. When the payee transfers the bill to a specific person
28. **Q28: What does "Without Recourse" mean in a bill?**
- **a.** Drawee cannot be held responsible
- **b.** Drawer has no further liability after endorsing
- **c.** Drawee refuses to pay
**Answer:** b. Drawer has no further liability after endorsing
29. **Q29: What is a "Promissory Note"?**
- **a.** An unconditional written promise to pay
- **b.** An agreement for a loan
- **c.** A bank statement
**Answer:** a. An unconditional written promise to pay
30. **Q30: What happens when a bill is dishonored
by non-acceptance?**
- **a.** Drawee must pay penalty
- **b.** Noting and protesting occur
- **c.** The bill is renewed
**Answer:** b. Noting and protesting occur
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