Tag: promissory note

Questions Related to promissory note

________ is the person who makes or draws the promissory note.

book keeping and accountancy accounting for bills of exchange meaning, definition and characteristics of promissory note promissory note bills of exchange and promissory note nature, advantages and types of cheques

  1. Maker

  2. Drawee

  3. Payee

  4. None

  5. None of the above

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Correct Option: A
Explanation:

Maker or Drawer is the person who makes or draws the promissory note to pay a certain amount as specified in the promissory note. He is also called the promisor.

A promissory note cannot be made payable to _________.

book keeping and accountancy accounting for bills of exchange meaning, definition and characteristics of promissory note promissory note bills of exchange and promissory note nature, advantages and types of cheques

  1. Bearer

  2. Owner

  3. Creditor

  4. Debtor

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Correct Option: A
Explanation:

The sum should be payable to a certain person. There are only two parties to a Promissory Note, one is the maker or the payer and another one is the payee. It is not transferable and thus, the amount is not payable to the bearer. The liability of the maker is primary and absolute.

Drawee or payee in whose favor the promissory note is drawn is also called as________.

book keeping and accountancy accounting for bills of exchange meaning, definition and characteristics of promissory note promissory note bills of exchange and promissory note nature, advantages and types of cheques

  1. Promisee

  2. Promisor

  3. Creditor

  4. Debtor

Show answer
Correct Option: A
Explanation:

The person to whom the promise to pay a sum of amount is made is called promisee. He is the person in whose favor the promissory note is drawn.

Bank on whom a cheque is drawn.

book keeping and accountancy accounting for bills of exchange meaning, definition and characteristics of promissory note promissory note bills of exchange and promissory note nature, advantages and types of cheques

  1. Drawer

  2. Drawee

  3. Payee

  4. Endorsee

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Correct Option: B

Cheque book facility is available for fixed deposit account.

book keeping and accountancy accounting for bills of exchange meaning, definition and characteristics of promissory note promissory note bills of exchange and promissory note nature, advantages and types of cheques

  1. True

  2. False

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Correct Option: B

Which of these statements is true about a Promisory note?

book keeping and accountancy accounting for bills of exchange meaning, definition and characteristics of promissory note promissory note bills of exchange and promissory note nature, advantages and types of cheques

  1. A Promissory note cannot be made payable to the bearer

  2. A Promissory note is a conditional order to pay

  3. A Promissory note does not require stamping

  4. A Promissory note cannot be dishonoured

Show answer
Correct Option: A
Explanation:

Some key features of promissory notes are as follows,

  • It must be in writing
  • It must contain an unconditional promise to pay.
  • The sum payable must be certain.
  • The promissory notes must be signed by the maker.
  • It must be payable to a certain person,cannot be made payable to the bearer.
  • It should be properly stamped.

Which of these is/ are essential for a valid promissory note?

book keeping and accountancy accounting for bills of exchange meaning, definition and characteristics of promissory note promissory note bills of exchange and promissory note nature, advantages and types of cheques

  1. Writing

  2. Proper stamping

  3. Amount to be paid must be certain

  4. All the three

Show answer
Correct Option: D
Explanation:

According to Negotiable Instruments Act,  1881, a promissory note is defined as an instrument in writing, containing an unconditional undertaking signed by the maker, to pay a certain sum of money only to or to the order of a certain person, or to the bearer of the instrument. The following are the features of a promissory note :

(1) It must be in writing.
(2) It must contain an unconditional promise to pay.
(3) The sum payable must be certain.
(4) It must be signed by the maker.
(5) The maker must sign it.
(6) It must be payable to a certain person.
(7) It should be properly stamped.

How many parties are there in a Promissory note?

book keeping and accountancy accounting for bills of exchange meaning, definition and characteristics of promissory note promissory note bills of exchange and promissory note nature, advantages and types of cheques

  1. $5$

  2. $4$

  3. $3$

  4. $2$

Show answer
Correct Option: D
Explanation:

There are two parties to a promissory note:

(1) Maker or Drawer is the person who makes or draws the promissory note to pay a certain amount as specified in the promissory note. He is also called the promisor.
(2) Drawee or Payee is the person in whose favour the promissory note is drawn. He is called the promisee.

________ is not an essential requirement of a valid promissory note?

book keeping and accountancy accounting for bills of exchange meaning, definition and characteristics of promissory note promissory note bills of exchange and promissory note nature, advantages and types of cheques

  1. Acceptance

  2. Unconditonality

  3. Maker and payee

  4. All the three

Show answer
Correct Option: A
Explanation:

According to the Negotiable Instruments Act, 1881, a promissory note is defined as an instrument in writing, containing an unconditional undertaking signed by the maker, to pay a certain sum of money only to or to the order of a certain person, or to the bearer of the instrument. The following are the features of a promissory note:

1. It must be in writing.
2. It must contain an unconditional promise to pay.
3. The sum payable must be certain.
4. It must be signed by the maker.
Acceptance is not an essential requirement of a valid promissory note.

A promissory note is a/ an ________.

book keeping and accountancy accounting for bills of exchange meaning, definition and characteristics of promissory note promissory note bills of exchange and promissory note nature, advantages and types of cheques

  1. unconditional order to pay

  2. unconditional undertaking to pay

  3. conditional order to pay

  4. conditional undertaking to pay

Show answer
Correct Option: B
Explanation:

According to the Negotiable Instruments Act, 1881, a promissory note is defined as an instrument in writing (not being a bank note or a currency note), containing an unconditional undertaking signed by the maker, to pay a certain sum of money only to or to the order of a certain person, or to the bearer of the instrument. However, according to the Reserve Bank of India Act, a promissory note payable to bearer is illegal. Therefore, a promissory note cannot be made payable to the bearer.