No verified paper has been uploaded for AJKPSC-PMS Paper Accountancy & Auditing 2008 MCQs yet.
The MCQs below are drawn from the Accountancy & Auditing subject category.
Showing 4141–4150
of 4621 MCQs
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4141
For which party is the rebate considered revenue when a bill of exchange is retired before its due date?
Retiring a bill means paying it before the maturity date. The holder usually allows a discount or rebate to the acceptor for early payment. Since the acceptor pays less than the face value of the bill, this rebate acts as a financial gain or revenue for the acceptor.
4142
When a bill of exchange is retired before its due date, how is the rebate treated by the holder of the bill?
Retiring a bill means paying it before the due date. The holder of the bill grants a rebate (a form of discount) to the acceptor for early payment. Consequently, this rebate is considered an expense or a loss for the holder, as they are receiving less than the full face value of the bill.
4143
For which party is the interest charged on the renewal of a bill considered revenue?
When a bill is renewed, the drawer grants an extension of time to the drawee. The interest charged for this delay is compensation for the extended credit period, making it an income or revenue for the drawer. Conversely, for the drawee, this interest represents an expense for the privilege of delaying payment.
4144
In the books of the drawer, which account is credited when a bill of exchange is renewed?
When a bill is renewed, the drawer charges interest to the drawee. Since interest is an income for the drawer, the Interest Account is credited in the drawer's books. The drawee's account is debited for the total amount due, including the interest.
4145
When a bill of exchange is renewed, the interest charged for the extension period is considered an expense for which party?
When a bill is renewed, the drawee (the person who owes the money) requests an extension of time. The drawer charges interest for this delay, making it an additional cost or expense for the drawee, who must pay the interest along with the principal amount at the new maturity date.
4146
When a bill is renewed, which party records the interest as a credit in their books?
When a bill is renewed, the drawer charges interest to the drawee for the extended period of credit. For the drawer, this interest is an income, and therefore, the interest account is credited in the drawer's books. The drawee, conversely, treats this as an expense and debits the interest account.
4147
How many parties are involved in a promissory note?
A promissory note is a financial instrument containing a written promise by one party (the maker or drawer) to pay another party (the payee) a definite sum of money. Unlike a bill of exchange, which involves three parties (drawer, drawee, and payee), a promissory note only involves two parties: the maker who promises to pay and the payee who receives the payment.
4148
Who is responsible for the preparation of a promissory note?
A promissory note is a financial instrument where the maker (the borrower) promises to pay a specific sum to the payee. In the context of bills of exchange, the person who creates and signs the note is the drawer, who acts as the debtor promising payment to the creditor.
4149
Who is the party responsible for drafting a promissory note?
A promissory note is a legal financial instrument where the issuer (the debtor) makes an unconditional promise to pay a specific sum of money to the payee (the creditor) at a future date or upon demand.
4150
What is the formal requirement for the creation of a valid promissory note?
A promissory note is a legal financial instrument that must be in writing to be enforceable. It serves as a formal, unconditional promise by one party to pay a specific sum of money to another party at a future date or on demand, requiring a written document for legal validity.
