MCQ on Negotiable Instruments Act 1881 | Banking MCQs

[MCQ on Negotiable Instruments Act 1881, Negotiable Instruments MCQs, Multiple Choice Questions and Answers, Banking MCQs]

Banking MCQs
Multiple Choice Questions and Answers
MCQ on Negotiable Instruments Act, 1881


1. Negotiable Instruments Act was passed in the Year:

a) 1981

b) 1881

c) 1872

d) 1930

Hint: Negotiable Instrument Act was passed in 1881 and it come into force in 1st March, 1882.

2. Which one of the following is not a negotiable instrument?

a) Bills of Exchange

b) Promissory Note

c) Cheque

d) Share Certificate

3. A negotiable instrument should be received for consideration. True

4. Who are the parties of a promissory note?

a) Maker

b) Payee

c) Both a & b above

d) None of the above

5. Three parties are involved in Bills of Exchange and cheque. Which one of the following is not included?

a) The Drawer

b) The Drawee

c) The payee

d) Maker

6. Share Certificate is not a negotiable instrument.                         True

7. Which one of the following is true for a bill of exchange?

a) Where a bill is dishonoured, the drawee is relieved of his liability.

b) A bill of exchange is a conditional document.

c) The person who pays the amount of the bill is known as the payee.

d) Three days are given as ‘days of grace’ to a bill.

8. Which one of the following is not true for a bill of exchange?

a) When a bill is renewed, the question of interest must come in.

b) On dishonouring a discounted bill, the drawer credits bank account.

c) The person to whom a bill of exchange is endorsed is called the endorser.

d) No days of grace are allowed on bills payable on demand or on slight.

9. If the due date happens to be a public holiday the bill is payable on the next succeeding working day.  False

10. Accommodation bills are not negotiable instruments. False

11. When a bill is paid before its due date it is said to be renewed. False

In case of cheque, no grace periods are allowed for payment.  True.

12. Three days of grace are allowed for payment, in case of promissory notes.  True.

13. Bills are drawn by creditors.

14. A promissory note is made by purchaser.

15. Bills receivable account is a real account.

16. Bills of exchange before its acceptance are called a draft.

17. The maker of a bill of exchange is called the drawer.

18. The acceptor of a bill of exchange is known as drawee.

19. Bill of exchange contains an unconditional order and promissory note contains an unconditional promise.

20. When a bill of exchange is drawn in indigenous language it is called Hundi.

21. A person to whom a bill is endorsed is called the endorsee.

22. If payment of a bill is not made on the due date it is said to be dishonoured.

23. Nothing charges are ultimately borne by drawee.

24. Rebate is allowed if a bill of exchange is paid before maturity.

25. On renewal of a bill, the interest charge is debited to the acceptor.

26. Accommodation bills are also known as kite bills.

Also Read:
1. HS 12 Banking Chapter wise Notes

2. AHSEC Class 12 Banking Question Papers From 2012 Till Date

3. AHSEC Class 12 Banking Solved Question Papers From 2012 Till Date

4. Banking Chapter wise MCQs

5. Class 12 Banking Important Questions and Question Bank


27. Accommodation bills are drawn and accepted without any Consideration.

28. Partial endorsement of an instrument is not valid.

29. General endorsement converts an order instrument into a bearer instrument.

30. Forged endorsement is not a valid endorsement.      True

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