Home › mcqs › Class 11 accountancy bills of exchange

Bills of Exchange (11 Accountancy)

Practise chapter-wise MCQs for Class 11 Accountancy — Bills of Exchange. Every question comes with the correct answer and an explanation.

✓ 100% Free ✓ No Login Needed ✓ NCERT / CBSE Aligned ✓ Download as PDF

TL;DR: Practise chapter-wise MCQs for Class 11 Accountancy — Bills of Exchange. Every question comes with the correct answer and an explanation.

Written & reviewed by the Syllab.in Academic Team (CBSE/NCERT subject experts) · Updated Aug 8, 2026

🤖 Stuck on any question? Ask Syllab's free AI Tutor for a step-by-step explanation — instant, unlimited, no login.

Practise chapter-wise MCQs for Class 11 Accountancy — Bills of Exchange. Every question comes with the correct answer and an explanation.

Bills of Exchange MCQs with Answers & Explanations

Q1. When a bill of exchange is payable on demand, it is also known as:

  1. A promissory note
  2. A cheque ✓ (correct)
  3. A trade bill
  4. A documentary bill

Explanation: A cheque is a specific type of bill of exchange that is drawn on a banker and payable on demand.

Q2. If a bill of exchange is payable 'at sight', when is it due for payment?

  1. On demand
  2. On a specified future date
  3. Immediately upon presentation ✓ (correct)
  4. After a specified period from the date of issue

Explanation: 'At sight' means the bill is payable immediately upon its presentation to the drawee for payment.

Q3. What is the consequence of dishonouring a bill of exchange?

  1. The original debt is cancelled
  2. The drawee is discharged from all liability
  3. The bill becomes invalid
  4. The holder can sue the drawer and endorsers ✓ (correct)

Explanation: Dishonour of a bill of exchange (by non-acceptance or non-payment) makes all parties liable on the bill (drawer and endorsers) liable to the holder, who can take legal action against them.

Q4. When a bill is discounted with a bank, the bank charges:

  1. Discount and commission ✓ (correct)
  2. Interest only
  3. Discount only
  4. Interest and commission

Explanation: When a bill is discounted, the bank deducts the interest for the unexpired period of the bill and may also charge a commission for its services.

Q5. Endorsement of a bill of exchange means:

  1. The drawee accepting the bill
  2. Transferring the right to receive payment to another person ✓ (correct)
  3. Cancelling the bill
  4. The drawer drawing the bill

Explanation: Endorsement is the process of signing on the back of the bill to transfer the ownership and the right to receive payment to another party.

Q6. When the drawee accepts the bill of exchange, it becomes:

  1. A promissory note
  2. A conditional order
  3. A legally binding instrument ✓ (correct)
  4. A draft

Explanation: Acceptance by the drawee signifies their unconditional promise to pay the amount specified in the bill on the due date, making it a legally binding instrument.

Q7. What is the primary purpose of a bill of exchange in business transactions?

  1. To record cash sales
  2. To acknowledge debt without a payment commitment
  3. To avoid stamp duty
  4. To provide credit facilities and facilitate payment ✓ (correct)

Explanation: Bills of exchange are primarily used to formalize credit transactions, allowing a seller to extend credit and a buyer to defer payment, with the bill acting as a negotiable instrument.

Q8. A bill of exchange can be drawn by:

  1. The drawer ✓ (correct)
  2. The payee
  3. The drawee
  4. Any party to the bill

Explanation: The drawer is the person who creates and signs the bill of exchange, ordering the drawee to pay a certain sum of money.

Q9. Retiring a bill under rebate means:

  1. Dishonouring the bill
  2. Paying the bill before its due date and receiving a discount ✓ (correct)
  3. Paying the bill on its due date
  4. Extending the due date of the bill

Explanation: Retiring a bill under rebate refers to the situation where the holder pays the bill before its maturity date and is allowed a rebate (discount) by the drawer or holder.

Q10. Which of the following is NOT a party to a bill of exchange?

  1. Drawee
  2. Payee
  3. Indorser ✓ (correct)
  4. Drawer

Explanation: While an indorser can become a party through endorsement, they are not an original party to the bill's creation. The primary parties are the drawer, drawee, and payee.

More 11 Accountancy MCQs

  • Accounting for Partnership: Basic Concepts
  • Goodwill: Nature and Valuation
  • Reconstitution of a Partnership Firm - Change in Profit Sharing Ratio
  • Reconstitution of a Partnership Firm - Admission of a Partner
  • Reconstitution of a Partnership Firm - Retirement and Death of a Partner
  • Dissolution of Partnership Firm

🤖 Stuck on any of these? Ask Syllab's free AI Tutor to explain step by step →

Explore:

  • Syllabus
  • Practice
  • Mock Tests
  • NCERT Solutions
  • Coding
  • GK Quiz
  • Career Predictor
  • AI Tutor
  • Live Quiz
  • Doubt Solver
  • Microlearning
  • Free Alternatives
  • Kids Zone
  • Study Room
  • Calculators
  • Worksheets

Syllab.in — Free learning for Indian students, Class 1–12