Here are questions based on the provided notes for Unit II: *Final Accounts* in Financial Accounting 1 (B.Com Hons).
Topic : Final Accounts (Simple and with Adjustments)
Basic Level:
Preparation of Final Accounts (Simple)
From the following trial balance, prepare the Trading and Profit & Loss Account for the year ending 31st March 2024 and the Balance Sheet as of that date:
| Particulars | Debit (₹) | Credit (₹) |
|---|---|---|
| Purchases | 1,00,000 | |
| Sales | 2,00,000 | |
| Wages | 20,000 | |
| Opening Stock | 50,000 | |
| Closing Stock | 30,000 | |
| Rent Expense | 10,000 | |
| Trade Payables | 40,000 | |
| Trade Receivables | 30,000 | |
| Capital | 1,00,000 | |
| Drawings | 20,000 |
Final Accounts with Depreciation
- Prepare the Trading and Profit & Loss Account and Balance Sheet with the following adjustments:
- Opening Stock: ₹40,000, Closing Stock: ₹50,000
- Sales: ₹2,00,000, Purchases: ₹1,50,000
- Rent: ₹15,000, Wages: ₹25,000
- Depreciation on Furniture: ₹5,000 (furniture worth ₹30,000), Depreciation on Machinery: ₹10,000 (machinery worth ₹50,000)
- Capital: ₹1,00,000, Drawings: ₹30,000
- Interest on Capital: ₹5,000
- Prepare the Trading and Profit & Loss Account and Balance Sheet with the following adjustments:
Preparing Balance Sheet from the Trial Balance
| Particulars | Debit (₹) | Credit (₹) |
|---|---|---|
| Cash | 10,000 | |
| Land and Building | 1,50,000 | |
| Capital | 2,00,000 | |
| Machinery | 80,000 | |
| Sundry Creditors | 70,000 | |
| Sundry Debtors | 60,000 | |
| Bills Receivable | 20,000 | |
| Loan from Bank | 50,000 |
Intermediate Level:
Final Accounts with Adjustments of Prepaid and Outstanding Expenses
- Prepare the Trading, Profit & Loss Account, and Balance Sheet from the following trial balance:
- Sales: ₹3,00,000, Purchases: ₹2,00,000, Gross Profit: ₹1,00,000
- Rent: ₹10,000 (outstanding ₹2,000)
- Salaries: ₹25,000 (prepaid ₹5,000)
- Insurance: ₹5,000 (outstanding ₹1,000)
- Closing Stock: ₹1,50,000
- Prepare the Trading, Profit & Loss Account, and Balance Sheet from the following trial balance:
Adjustment for Bad Debts
- Prepare the final accounts from the following trial balance, taking into account:
- Sales: ₹4,00,000, Purchases: ₹2,50,000, Gross Profit: ₹1,50,000
- Bad debts: ₹10,000
- Provision for Doubtful Debts: ₹5,000
- Rent: ₹15,000, Salaries: ₹30,000
- Depreciation on Machinery: ₹10,000, Furniture: ₹3,000
- Prepare the final accounts from the following trial balance, taking into account:
Adjustments for Depreciation and Prepaid Expenses
- Prepare the Trading, Profit & Loss Account, and Balance Sheet for XYZ Ltd. for the year ending 31st March 2024:
- Depreciation on Machinery (₹30,000) and Furniture (₹5,000)
- Prepaid Expenses: Rent ₹2,000, Insurance ₹1,000
- Outstanding Expenses: Salaries ₹3,000, Wages ₹4,000
- Closing Stock: ₹60,000
- Prepare the Trading, Profit & Loss Account, and Balance Sheet for XYZ Ltd. for the year ending 31st March 2024:
Treatment of Provision for Taxation
- XYZ Ltd. earned a profit of ₹1,00,000 before tax. Provision for taxation is 30%. Prepare the final accounts, including the tax provision.
Preparation of Accounts with Adjustment for Loss on Sale of Asset
- XYZ Ltd. sold a machine for ₹40,000 (original cost ₹60,000, accumulated depreciation ₹15,000). Prepare the final accounts with this adjustment.
Adjustment for Interest on Drawings
- Prepare the final accounts for a partnership firm where interest on drawings is to be charged at 6% per annum on the average drawings of ₹10,000 during the year.
Final Accounts with Goods Distributed as Free Samples
- The company sold goods worth ₹1,50,000 but distributed ₹10,000 worth of goods as free samples. How would you treat this in the final accounts?
Advanced Level:
Final Accounts with Provision for Doubtful Debts
- The trial balance shows trade receivables of ₹1,00,000. The company maintains a provision for doubtful debts of 5%. Prepare the final accounts including the provision for doubtful debts.
Adjustment for Commission Receivable
- A company earned commission of ₹5,000, which was not recorded in the books. Prepare the final accounts with the necessary adjustments.
Treatment of Unearned Income
- Unearned income of ₹15,000 was recorded as income in the books. The correct treatment is to adjust it in the final accounts as a liability.
Final Accounts for a Non-Profit Organization
- Prepare the Income and Expenditure Account and Balance Sheet for a non-profit organization from the following:
- Donations: ₹50,000
- Grants: ₹30,000
- Expenses: ₹25,000
- Assets: ₹40,000
- Liabilities: ₹10,000
Adjustments for Partnership Profit Sharing Ratio
- Prepare the final accounts for a partnership with the following profit-sharing ratio: Partner A: 60%, Partner B: 40%. Profit before adjustments is ₹1,00,000, and interest on capital is ₹5,000 for A and ₹3,000 for B.
Final Accounts with Revaluation of Assets
- The firm revalued its assets, increasing the value of land from ₹50,000 to ₹70,000 and building from ₹30,000 to ₹40,000. Prepare the final accounts, including the revaluation adjustments.
Accounting for Bonus Provision
- A company decided to provide a bonus of 10% of the profit before tax. The profit before tax is ₹2,00,000. Prepare the final accounts, including the provision for bonus.
Adjustments for Joint Venture
- The trial balance includes the following for a joint venture: Revenue from venture: ₹3,00,000, Costs: ₹2,50,000, Share of profit (60% for A and 40% for B). Prepare the final accounts considering the distribution of profits.
Final Accounts with Treatment of Dividends
- The company declared a dividend of ₹2,00,000 from its profit. The amount is to be deducted from the Profit & Loss Appropriation Account. Prepare the final accounts accordingly.
Adjustment for Prior Period Expenses
- A prior period expense of ₹10,000 was found in the current year. How would you treat it in the Profit & Loss Account and Balance Sheet?
Topic : Bills of Exchange
Prepare a bill of exchange: A sold goods worth ₹50,000 to B on credit. The terms were that the bill will be drawn for 3 months and payable at the end of the period. Prepare the bill of exchange and mention the necessary details.
Endorsement of Bill of Exchange: A bill of exchange for ₹10,000 is drawn by Mr. X on Mr. Y and accepted by Mr. Y. Mr. Y endorses the bill to Mr. Z. Write the endorsement on the back of the bill.
Journal Entries for Bills of Exchange: On 1st January, Mr. A draws a bill of exchange for ₹20,000 on Mr. B for 2 months. Mr. B accepts the bill. Prepare the journal entries in the books of both A and B.
Dishonor of Bill of Exchange: On the due date, a bill of exchange for ₹15,000 was dishonored. The drawer received the dishonored bill. Pass the journal entry for dishonor in the books of the drawer.
Retirement of Bill of Exchange: On the due date, a bill of exchange for ₹10,000 was paid. The discount allowed for early payment was ₹500. Pass the journal entries in the books of both parties involved.
Medium Questions:
Recording of Bills of Exchange in Final Accounts: The balance sheet of a company shows the following:
- Bills receivable: ₹50,000
- Bills payable: ₹30,000 Prepare the necessary adjustments in the final accounts.
Endorsement and Settlement of a Bill of Exchange: A bill for ₹25,000 drawn by Mr. X on Mr. Y for 3 months is endorsed by Mr. Y to Mr. Z. Mr. Z settles the bill on maturity. Show the journal entries in all three books.
Discounting of Bill of Exchange: Mr. A discounts a bill of exchange for ₹20,000 with the bank at 12% per annum for 3 months. Calculate the discount and prepare the necessary journal entries.
Part Payment on Bill of Exchange: A bill for ₹50,000 was drawn on 1st January by Mr. X and payable after 2 months. On 1st March, Mr. X makes a part payment of ₹30,000. Prepare the journal entries for the transaction.
Bill of Exchange for Collection: A bill for ₹40,000 is drawn by Mr. A on Mr. B and is sent to the bank for collection. The bank charges a collection fee of ₹500. Show the journal entries in the books of Mr. A.
Hard Questions:
Accounting for Bills of Exchange in Balance Sheet: The balance sheet of Mr. A shows the following as of 31st December:
- Bills Receivable: ₹1,00,000
- Bills Payable: ₹80,000
- Cash in Hand: ₹25,000
- Bank Loan: ₹50,000 Prepare the final accounts (Trading & P&L Account and Balance Sheet).
Recording of Bills of Exchange under Insolvency: Mr. X draws a bill on Mr. Y for ₹15,000. Mr. Y becomes insolvent before the due date. A sum of ₹9,000 is received from Mr. Y's estate. Pass the necessary journal entries in Mr. X's books.
Journal Entries for Bill of Exchange with Interest: Mr. A draws a bill on Mr. B for ₹50,000, payable after 3 months, at an interest rate of 10% per annum. Show the journal entries for the drawing, acceptance, and settlement of the bill, considering the interest.
Acquisition of Goods on Credit with Bill of Exchange: A purchased goods worth ₹80,000 from B and drew a bill of exchange for ₹90,000 for 3 months, including ₹10,000 for interest. B accepted the bill. Show the journal entries for the transaction.
Bill of Exchange with Partial Endorsement and Transfer: A bill of exchange for ₹40,000 is drawn on Mr. X by Mr. Y, and Mr. Y endorses the bill partially to Mr. Z for ₹25,000 and to Mr. A for ₹15,000. Show the necessary journal entries for the endorsement and settlement of the bill.
Effect of Dishonor of Bill on Final Accounts: A bill of exchange for ₹30,000 was drawn by Mr. A on Mr. B and was dishonored. Show the effect of dishonor on Mr. A's trading and profit & loss accounts.
Analysis of Outstanding Bills for Final Accounts: A company has bills receivable of ₹200,000 and bills payable of ₹150,000. The company anticipates a doubtful debt of ₹10,000 on bills receivable and expects a discount of ₹5,000 on bills payable. Adjust the final accounts accordingly.
Account Treatment for Bills of Exchange under Foreign Exchange: A bill of exchange for ₹100,000 is drawn on Mr. Z by Mr. X for 6 months. The payment is made in foreign currency, and the exchange rate on the due date changes from ₹80/$1 to ₹82/$1. Calculate the effect of the exchange rate difference and pass the journal entries.
Accounting for Bills of Exchange in Partnership Accounts: A partnership firm has drawn a bill of exchange for ₹50,000 on its debtor. The partnership agreement allows for a 50% profit-sharing ratio. Show the journal entries in the partnership's books and show how it will affect the final accounts.
Treatment of Bills of Exchange in Case of Bankruptcy: Mr. A has drawn a bill of exchange for ₹60,000 on Mr. B, but Mr. B has filed for bankruptcy before the bill's maturity. Pass the necessary journal entries, including the write-off of the loss in the final accounts.
Topic : Promissory Notes
Trial Balance and Preparation of Final Accounts
- Prepare the Profit and Loss Account and Balance Sheet from the following trial balance:
- Capital: ₹1,00,000
- Sales: ₹3,50,000
- Purchases: ₹2,00,000
- Salaries: ₹40,000
- Rent: ₹30,000
- Bills Receivable: ₹10,000
- Bank Loan: ₹50,000
- Prepare the Profit and Loss Account and Balance Sheet from the following trial balance:
Closing Entries
- Prepare the Journal Entries for the following adjustments:
- Closing stock ₹50,000
- Depreciation on machinery ₹10,000
- Outstanding salaries ₹5,000
- Prepare the Journal Entries for the following adjustments:
Income Statement Adjustment
- Prepare a Profit and Loss Account after adjusting the following:
- Prepaid expenses ₹2,000
- Accrued income ₹3,000
- Interest on loan ₹1,000
- Prepare a Profit and Loss Account after adjusting the following:
Promissory Note
- A company issues a promissory note for ₹20,000 to settle a creditor's account. How will it be recorded in the journal? What will be its impact on the final accounts at year-end?
Depreciation Calculation
- The cost of machinery is ₹60,000 with an estimated residual value of ₹10,000. Calculate depreciation using the Straight-Line Method for one year.
Intermediate Level (Moderate)
Balance Sheet Preparation
- Given the following balances, prepare the Balance Sheet:
- Fixed Assets: ₹2,00,000
- Current Assets: ₹1,00,000
- Long-term Liabilities: ₹50,000
- Current Liabilities: ₹30,000
- Capital: ₹2,20,000
- Given the following balances, prepare the Balance Sheet:
Outstanding Expenses
- The company has the following balances:
- Salary ₹50,000 (including ₹5,000 unpaid)
- Rent ₹30,000 (including ₹3,000 unpaid)
- Prepaid insurance ₹2,000
- Prepare the Profit and Loss Account.
- The company has the following balances:
Bills Payable and Receivable
- The company has received a Promissory Note for ₹30,000 from a debtor, and has issued a Promissory Note for ₹20,000. Show the necessary journal entries.
Inventory Valuation
- The opening inventory of a company was ₹40,000, purchases during the year were ₹150,000, and the closing inventory is ₹45,000. Prepare the Trading Account and show how inventory affects profits.
Profit and Loss Adjustment
- Adjustments are made for bad debts (₹2,000), depreciation (₹5,000), and outstanding rent (₹1,000). Prepare the Profit and Loss Account.
Advanced Level (Hard)
- Final Accounts with Adjustments
- From the following information, prepare the Final Accounts:
- Net Profit: ₹75,000
- Depreciation on Fixed Assets: ₹10,000
- Provision for Tax: ₹5,000
- Outstanding Rent: ₹3,000
- Closing Stock: ₹20,000
- Partnership Final Accounts
- Two partners, A and B, share profits in a 3:2 ratio. The following adjustments are required:
- A’s salary ₹10,000, B’s salary ₹8,000
- Interest on capital ₹5,000
- Profit for the year: ₹50,000
- Prepare the Profit and Loss Appropriation Account.
- Promissory Note and Final Accounts
- A company receives a promissory note from a customer for ₹15,000 in settlement of a ₹16,000 receivable. Record the journal entry and show its impact on the Profit and Loss Account and Balance Sheet.
- Contingent Liabilities
- A company has pending legal cases that might result in a liability of ₹30,000. How should contingent liabilities be reflected in the final accounts?
- Provision for Doubtful Debts
- At the end of the year, the company decides to create a Provision for Doubtful Debts of 5% on accounts receivable of ₹1,00,000. Prepare the necessary journal entry and show its impact on the Profit and Loss Account.
- Advanced Depreciation Calculation
- A company has machinery worth ₹1,00,000. The residual value is ₹10,000, and the useful life is 5 years. Using the Diminishing Balance Method, calculate the depreciation for the first three years.
- Revaluation of Assets in Partnership
- The assets of the firm are revalued. Land has been increased by ₹20,000, and machinery has been decreased by ₹10,000. Partners A and B share profits in a 4:3 ratio. How will these changes affect the capital accounts?
- Bad Debts and Final Accounts
- The company has made provisions for bad debts in the previous year. This year, it is found that ₹3,000 of the debts written off last year have been recovered. How will this be accounted for in the Profit and Loss Account and Balance Sheet?
- Prepaid and Accrued Expenses
- You are given the following balances:
- Prepaid Expenses ₹4,000
- Accrued Income ₹2,000
- Accrued Expenses ₹1,000
- Prepare the Profit and Loss Account after incorporating these adjustments.
- Final Accounts of a Company with Complex Transactions
- A company purchased machinery for ₹2,00,000 on 1st January 2024. It sold machinery with a book value of ₹50,000 for ₹60,000 during the year. The company also issued a promissory note for ₹25,000 to settle a liability. Prepare the Trading, Profit and Loss Account, and Balance Sheet considering the depreciation of ₹10,000 on machinery.
Easy to Medium Questions:
Prepare a Trading Account
The following information is available for ABC Ltd. for the year ended 31st March 2024:- Opening Stock: ₹50,000
- Purchases: ₹1,50,000
- Sales: ₹2,50,000
- Closing Stock: ₹75,000
- Freight Inward: ₹5,000
- Returns Outward: ₹10,000
Task: Prepare the Trading Account for the year ended 31st March 2024.
Gross Profit Calculation
XYZ Ltd. has the following data for the year:- Total Sales: ₹500,000
- Gross Profit Percentage: 25%
Task: Calculate the Gross Profit and the Cost of Goods Sold (COGS).
Profit and Loss Account Adjustment
Given the following adjustments for the year 2024:- Prepaid Insurance: ₹5,000
- Accrued Salaries: ₹3,000
- Depreciation on Machinery: ₹10,000
- Bad Debts Written Off: ₹2,000
Task: Prepare the Profit and Loss Account considering these adjustments.
Balance Sheet Preparation
The following trial balance of PQR Ltd. as of 31st March 2024 is available:- Capital: ₹1,00,000
- Debtors: ₹50,000
- Creditors: ₹30,000
- Closing Stock: ₹20,000
- Cash in Hand: ₹5,000
- Land: ₹40,000
- Drawings: ₹15,000
- Expenses: ₹10,000
Task: Prepare the Balance Sheet as of 31st March 2024.
Treatment of Depreciation
Given the following information:- Fixed Assets: ₹2,00,000
- Depreciation Rate: 10% per annum on reducing balance method
Task: Calculate the Depreciation for the first 3 years.
Outstanding Expenses and Prepaid Expenses
Given the following adjustments:- Outstanding Rent: ₹4,000
- Prepaid Rent: ₹2,000
Task: Show how these adjustments will appear in the Profit and Loss Account and Balance Sheet.
Provision for Doubtful Debts
A company has total debtors of ₹100,000. The company maintains a provision for doubtful debts at 5% of the debtors.Task: Calculate the Provision for Doubtful Debts and show its treatment in the Profit and Loss Account and Balance Sheet.
Interest on Capital and Drawings
Partners A and B have capital balances of ₹50,000 and ₹40,000, respectively. The partnership agreement specifies interest on capital at 6% per annum, and interest on drawings is charged at 5% per annum. Partner A has withdrawn ₹5,000 during the year, and Partner B has withdrawn ₹4,000.Task: Calculate the Interest on Capital and Interest on Drawings.
Preparation of Final Accounts (Incomplete Data)
The following data is available for ABC Ltd. for the year ended 31st March 2024:- Net Profit before adjustments: ₹100,000
- Adjustments:
- Depreciation on Building: ₹8,000
- Prepaid Expenses: ₹2,000
- Outstanding Wages: ₹3,000
Task: Prepare the Profit and Loss Account and Balance Sheet.
Treatment of Dividends
A company declared a dividend of ₹10 per share on 1st April 2024. The company has 50,000 shares outstanding, and the dividend is payable on 1st May 2024.Task: Show the journal entry for the declaration of the dividend and its impact on the Balance Sheet as of 31st March 2024.
Hard Questions:
Prepare Final Accounts (Partnership with Adjustments)
The trial balance of PQR & Co. as of 31st March 2024 is as follows:- Capital: ₹2,00,000
- Drawings: ₹50,000
- Salaries: ₹30,000
- Rent: ₹15,000
- Commission: ₹10,000
- Sundry Expenses: ₹8,000
- Profit-sharing Ratio: 3:2 between partners A and B
Additional Information:
- Provide for:
- Salaries ₹5,000
- Commission ₹3,000
- Interest on Capital at 6%
- Interest on Drawings at 5%
- Closing Stock: ₹20,000
- The partnership earns an overall profit of ₹40,000.
Task: Prepare the Trading Account, Profit and Loss Account, and Balance Sheet.
Accounting for Bills of Exchange
ABC Ltd. sells goods worth ₹1,00,000 to XYZ Ltd. on 1st March 2024. The terms of the sale are that XYZ Ltd. will pay via a 3-month bill of exchange, due on 1st June 2024.Task: Record the journal entries for ABC Ltd. on 1st March 2024 and 1st June 2024 when the payment is received.
Final Accounts for a Company (Advanced Adjustments)
XYZ Ltd. has the following balances as of 31st March 2024:- Share Capital: ₹10,00,000
- Retained Earnings: ₹2,00,000
- Sales: ₹15,00,000
- Purchases: ₹8,00,000
- Depreciation on Plant and Machinery: ₹1,50,000
- Bad Debts: ₹10,000
- Provision for Taxation: ₹2,50,000
- Operating Expenses: ₹1,00,000
Additional Information:
- 10% dividend is to be paid on the issued capital.
- Provision for Taxation is required to be made at ₹3,00,000.
Task: Prepare the Profit and Loss Account and Balance Sheet for XYZ Ltd.
Partnership Final Accounts (Goodwill)
ABC & Co. is a partnership firm. The following details are provided for the year 2024:- Net Profit before adjustments: ₹80,000
- Interest on capital: ₹6,000 (A: ₹4,000, B: ₹2,000)
- Salaries to partners: ₹10,000 (A: ₹6,000, B: ₹4,000)
- Goodwill to be calculated using the 3-year average profit method. The average profits of the previous 3 years are ₹30,000, ₹35,000, and ₹25,000.
Task: Calculate the Goodwill and adjust the capital accounts accordingly.
Preparation of Consolidated Balance Sheet
A holding company, ABC Ltd., holds 60% of the shares of XYZ Ltd. as of 31st March 2024. The trial balance of both companies is available.Task: Prepare the Consolidated Balance Sheet as of 31st March 2024, showing all necessary adjustments (e.g., elimination of intra-group transactions, goodwill, minority interest).
Accounting for Retained Earnings
XYZ Ltd. has the following balances:- Profit for the year: ₹1,50,000
- Dividends declared: ₹50,000
- Opening retained earnings: ₹100,000
Task: Prepare the Statement of Retained Earnings for the year ended 31st March 2024.
Adjustments for Incomplete Final Accounts
The trial balance of a company is incomplete. The following information is given:- Opening stock: ₹30,000
- Purchases: ₹1,20,000
- Sales: ₹2,00,000
- Closing stock: ₹40,000
- Rent due but not paid: ₹5,000
- Salaries paid: ₹15,000
- Depreciation on machinery: ₹8,000
Task: Prepare the Trading and Profit & Loss Account and Balance Sheet.
Partnership Final Accounts (Profit-sharing Ratios and Appropriations)
A and B are partners sharing profits and losses in the ratio of 3:2. The following details are given:- Net Profit: ₹60,000
- Salaries: ₹10,000 (A: ₹6,000, B: ₹4,000)
- Interest on Capital: ₹5,000 (A: ₹3,000, B: ₹2,000)
Task: Prepare the Profit and Loss Appropriation Account and show the adjustments in the capital accounts.
Advanced Adjustments in Profit and Loss Account
The company has a net profit of ₹5,00,000 for the year. The following adjustments are required:- Provision for Tax: ₹1,00,000
- Interim Dividend: ₹50,000
- Depreciation: ₹30,000
Task: Prepare the Profit and Loss Account after considering the above adjustments.
Accounting for Stock Options (ESOP)
XYZ Ltd. has granted 1,000 stock options to its employees at an exercise price of ₹100 each. The market price on the grant date was ₹150 per share. The vesting period is 3 years.Task: Calculate the accounting treatment of stock options, including the necessary journal entries for the first year of vesting.
- What is the purpose of preparing final accounts?
- Define profit and loss account. What is its significance?
- Explain the structure of a balance sheet.
- What are the major components of a trading account?
- What is the difference between gross profit and net profit?
- What is the role of the trial balance in preparing final accounts?
- What adjustments are necessary for preparing final accounts?
- Explain the term ‘accrual basis of accounting.’
- What is depreciation, and how is it accounted for in final accounts?
- Why is closing stock shown in the final accounts?
- Discuss the importance of adjusting entries in the preparation of final accounts.
- What is the treatment of outstanding expenses in the final accounts?
- Why are provisions made for bad debts in final accounts?
- Explain the concept of 'prepaid expenses' and its treatment in final accounts.
- What are the key differences between the horizontal and vertical formats of financial statements?
- How is the treatment of dividends done in final accounts?
- What is the significance of the profit and loss adjustment account?
- What are the implications of not adjusting for income tax while preparing final accounts?
- Explain the term ‘capital reserves’ and its presentation in the balance sheet.
- Discuss the significance of preparing a cash flow statement along with final accounts.
- Define a bill of exchange. What is its purpose in business transactions?
- What are the characteristics of a valid bill of exchange?
- Explain the difference between a bill of exchange and a promissory note.
- What are the different types of bills of exchange?
- What are the essential components of a bill of exchange?
- Describe the process of accepting a bill of exchange.
- Explain the term ‘maturity date’ in relation to a bill of exchange.
- What does the term ‘endorsement’ mean in the context of bills of exchange?
- What is the significance of a drawer and drawee in a bill of exchange?
- What is the procedure followed when a bill of exchange is dishonored?
- What is meant by the term ‘accommodation bill’?
- Explain the process of discounting a bill of exchange.
- What are the accounting entries for the discounting of a bill of exchange?
- What is the difference between a general bill of exchange and an accommodation bill?
- How is a promissory note different from a bill of exchange?
- Discuss the rights and obligations of the holder of a bill of exchange.
- What is the procedure for paying a bill of exchange on the due date?
- What is a 'bill of exchange with recourse'?
- Explain the term ‘acceptance of a bill of exchange’ and its impact on the drawee.
- What is the treatment of a bill of exchange in the final accounts of a business?
- Discuss the concept of ‘bill of exchange not accepted.’
- What are the accounting entries when a bill of exchange is dishonored due to non-payment?
- Explain the role of bills of exchange in international trade.
- What is the effect of a bill of exchange being endorsed to a third party?
- What are the benefits of using bills of exchange in business transactions?
- What is meant by ‘promissory note payable on demand’?
- How is the accounting for accommodation bills done?
- What are the different ways in which a bill of exchange can be settled?
- How does the holder of a bill of exchange protect his/her interests in case of default?
- What are the consequences if a bill of exchange is not honored upon maturity?
Thank You!
We extend our heartfelt gratitude to this platform for offering comprehensive and well-structured notes on Final Accounts and related topics such as Bills of Exchange and Promissory Notes. The detailed explanations of simple and adjusted final accounts in both horizontal and vertical formats, along with the practical insights into general and accommodation bills, have been invaluable in enhancing our understanding.