Class 11 Accountancy - Chapter Bill of Exchange NCERT Solutions | Briefly explain the effects of dishonour
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:-
A bill of exchange must contain “an unconditional promise to pay” Do you agree with a statement?
- Q:-
Give the performa of a Bills Payable Book.
Popular Questions of Class 11 Accountancy
- Q:-
Why is it necessary to record the adjusting entries in the preparation of final accounts?
- Q:-
State the meaning of incomplete records?
- Q:-
What is ‘Depreciation’?
- Q:-
Briefly state how the cash book is both journal and a ledger.
- Q:-
State the meaning of a trial balance?
- Q:-
State the four basic requirements of a database applications.
- Q:-
Define accounting.
- Q:-
State the different elements of a computer system.
- Q:-
Why is it necessary for accountants to assume that business entity will remain a going concern?
- Q:-
State the need for the preparation of bank reconciliation statement?
Recently Viewed Questions of Class 11 Accountancy
- Q:-
As an accountant of a company, you are disappointed to learn that the totals in your new trial balance are not equal. After going through a careful analysis, you have discovered only one error. Specifically, the balance of the Office Equipment account has a debit balance of 15,600 on the trial balance. However, you have figured out that a correctly recorded credit purchase of pendrive for 3,500 was posted from the journal to the ledger with a 3,500 debit to Office Equipment and another 3,500 debit to creditors accounts. Answer each of the following questions and present the amount of any misstatement :
(a) Is the balance of the office equipment account overstated, understated, or correctly stated in the trial balance?
(b) Is the balance of the creditors account overstated, understated, or correctly stated in the trial balance?
(c) Is the debit column total of the trial balance overstated, understated, or correclty stated?
(d) Is the credit column total of the trial balance overstated, understated, or correctly stated?
(e) If the debit column total of the trial balance is 2,40,000 before correcting the error, what is the total of credit column. - Q:-
If the trial balance agrees, it implies that:
(a) There is no error in the books.
(b) There may be two sided errors in the book.
(c) There may be one sided error in the books.
(d) There may be both two sided and one sided errors in the books. - Q:-
Rahul’s trial balance provide you the following information :
Debtors Rs. 80,000
Bad debts Rs. 2,000
Provision for doubtful debts Rs. 4,000It is desired to maintain a provision for bad debts of Rs. 1,000
State the amount to be debited/credited in profit and loss account :
(a) Rs. 5,000 (Debit) (b) Rs. 3,000 (Debit)
(c) Rs. 1,000 (Credit) (d) none of these. - Q:-
If the rent of one month is still to be paid the adjustment entry will be :
(a) Debit outstanding rent account and Credit rent account.
(b) Debit profit and loss account and Credit rent account.
(c) Debit rent account and Credit profit and loss account.
(d) Debit rent account and Credit outstanding rent account. - Q:-
An appropriate accounting software for a small business organisation having only one user and single office location would be ........
- Q:-
Which of the following is not an error of commission:
(a) Overcasting of sales book.
(b) Credit sales to Ramesh 5,000 credited to his account.
(c) Wrong balancing of machinery account.
(d) Cash sales not recorded in cash book. - Q:-
Goods purchased on cash are recorded in the :
(i) Purchases (journal) book
(ii) Sales (journal) book
(iii) Cash book
(iv) Purchases return (journal) book - Q:-
Complete the following sentences with appropriate words:
(a) Information in financial reports is based on .....................
(b) Internal users are the ..................... of the business entity.
(c) A ..................... would most likely use an entities financial report to determine whether or not the business entity is eligible for a loan.
(d) The Internet has assisted in decreasing the ..................... in issuing financial reports to users.
(e) ..................... users are groups outside the business entity, who uses the information to make decisions about the business entity.
(f) Information is said to be relevent if it is ......................
(g) The process of accounting starts with ............ and ends with ............
(h) Accounting measures the business transactions in terms of ............ units.
(i) Identified and measured economic events should be recording in ............ order. - Q:-
What is a bank overdraft?
- Q:-
Give four examples each of ‘provision’ and ‘reserves’.
- All Chapters Of Class 11 Accountancy
- All Subjects Of Class 11