Tag: book keeping and accountancy

Questions Related to book keeping and accountancy

Discount allowed by the holder of the bill to encourage retirement is called _____.

book keeping and accountancy bills of exchange renewal of the bill retirement and renewal of a bill accounting treatment of bill transaction

  1. discount

  2. rebate

  3. both

  4. none

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Correct Option: B

Payment of bill before due date _________________.

book keeping and accountancy bills of exchange renewal of the bill retirement and renewal of a bill accounting treatment of bill transaction

  1. Retirement of bill

  2. Discounting of bill

  3. Honouring of bill

  4. Dishonour of bill

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Correct Option: A
Explanation:

When drawee makes the payment of the bill before its due date it is called retirement of the bill.

Rebate on bills discounted is _______ from interest and discount in the P/L Account .

book keeping and accountancy bills of exchange renewal of the bill retirement and renewal of a bill accounting treatment of bill transaction

  1. added

  2. deducted

  3. not deducted

  4. none of the above

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Correct Option: B
Explanation:

Rebate on bills discounted is also known as discount received in advance i.e. discount received but not earned.

In such a situation, the rebate on bills discounts will be deducted from interest and discount in profit & loss account and shown as liability in the balance sheet.

When an amount is paid before maturity the bill is said to be ______.

book keeping and accountancy bills of exchange renewal of the bill retirement and renewal of a bill accounting treatment of bill transaction

  1. Hnoured

  2. Dishonoured

  3. Retired

  4. Discounted

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Correct Option: C
Explanation:

When Drawee makes the payment of the bill before its due date it is called retirement of the bill.

At the time of retirement of a bill, the acceptor debits:

book keeping and accountancy bills of exchange renewal of the bill retirement and renewal of a bill accounting treatment of bill transaction

  1. Creditors Account

  2. Bank Account

  3. Discount Account

  4. Bills Payable Account

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Correct Option: D

__________________ means cancellation of old bill and drawing a new bill.

book keeping and accountancy bills of exchange renewal of the bill retirement and renewal of a bill accounting treatment of bill transaction

  1. Dishonour of bill

  2. Honouring of bill

  3. Retirement of bill

  4. Renewal of bill

Show answer
Correct Option: D
Explanation:

When on or before due date drawee finds himself unable to make the payment of the bill, he may request the drawer to cancel the old bill and accept a new one, this process is called renewal of the bill.

At the time of the renewal of a bill, interest account is ____________ in the books of the drawee.

book keeping and accountancy bills of exchange renewal of the bill retirement and renewal of a bill accounting treatment of bill transaction

  1. credited

  2. totalled

  3. debited

  4. posted

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Correct Option: C
Explanation:

In the books of Acceptor

1] Entry for Cancellation of Bill:

Bills Payable A/c ……….………….. Dr

To Drawer Personal A/c

2] Entry for part payment in cash:

Drawer’s Personal A/c……………… Dr

To Cash A/c

3] Entry for Interest Paid:

Interest A/c …………………………. Dr

To Cash A/c

4] Interest not paid:

Interest A/c …………………………. Dr

To Drawer’s Personal A/c

Which of the following is not correct ?

book keeping and accountancy bills of exchange renewal of the bill retirement and renewal of a bill accounting treatment of bill transaction

  1. A joint venture business has a definite life.

  2. No cancellation entry is required when a bill is renewed.

  3. The gain from side of capital assets need not be added to revenue to ascertain the net profit of a business.

  4. If the amount is posted in the wrong account or it is written on the wrong side of an account, it is called error of commission.

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Correct Option: B

____________ means payment of  bill before due date.

book keeping and accountancy bills of exchange renewal of the bill retirement and renewal of a bill accounting treatment of bill transaction

  1. Retirement of bill

  2. Renewal of bill

  3. Endorsement of bill

  4. Discounting of bill

Show answer
Correct Option: A
Explanation:

Retirement of Bill Means Payment of the Bill before Due Date.

At the time of retirement of a bill, the accounts to be credited are:

book keeping and accountancy bills of exchange renewal of the bill retirement and renewal of a bill accounting treatment of bill transaction

  1. Bills Payable and Bank.

  2. Bills Receivable and Bank.

  3. Bank and Discount.

  4. Bills Payable and Discount.

Show answer
Correct Option: C