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Class 11 Finance MCQ Chapter 13 Negotiable Instruments
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Negotiable Instruments
Chapter: 13
| MCQ |
1. The Negotiable Instruments Act, 1881, came into force on:
(i) 1st March, 1880.
(ii) 1st March, 1881.
(iii) 1st March, 1882.
(iv) 1st April, 1882.
Ans: (iii) 1st March, 1882.
2. What is the primary purpose of negotiable instruments in the modern business world?
(i) To transfer ownership of property.
(ii) To transfer money from one person to another.
(iii) To record business transactions.
(iv) To provide loans to businesses.
Ans: (ii) To transfer money from one person to another.
3. Which of the following is NOT a type of negotiable instrument under the Negotiable Instruments Act, 1881?
(i) Promissory Notes.
(ii) Bills of Exchange.
(iii) Cheques.
(iv) Letters of Credit.
Ans: (iv) Letters of Credit.
4. Which of the following is included in the definition of negotiable instruments under Indian law?
(i) Promissory Notes, Bills of Exchange, and Cheques.
(ii) Bank Notes and Digital Wallets.
(iii) Land Deeds and Contracts.
(iv) Insurance Policies.
Ans: (i) Promissory Notes, Bills of Exchange, and Cheques.
5. Which of the following is NOT regulated by the Negotiable Instruments Act, 1881?
(i) Promissory Notes.
(ii) Bills of Exchange.
(iii) Cheques.
(iv) Property Deeds.
Ans: (iv) Property Deeds.
6. What is a ‘Hundi’ as per the Negotiable Instruments Act, 1881?
(i) A type of promissory note used for borrowing.
(ii) A cheque issued by a bank in a vernacular language.
(iii) A bill of exchange written in a vernacular language.
(iv) A receipt for goods sold.
Ans: (iii) A bill of exchange written in a vernacular language.
7. What is the primary purpose of negotiable instruments in the modern business world?
(i) To transfer ownership of property.
(ii) To transfer money from one person to another.
(iii) To record business transactions.
(iv) To provide loans to businesses.
Ans: (ii) To transfer money from one person to another.
8. If a stolen bearer cheque is transferred to a new person, who receives it in good faith, what status does the new holder acquire?
(i) Legal Representative.
(ii) Holder in Due Course.
(iii) Transferor.
(iv) Beneficiary.
Ans: (ii) Holder in Due Course.
9. What does the “Right to Sue” allow the holder of a negotiable instrument to do?
(i) Transfer the instrument without restrictions.
(ii) File a lawsuit to recover the amount due from the liable party.
(iii) Refuse payment on the instrument.
(iv) Exchange the instrument for a different negotiable instrument.
Ans: (ii) File a lawsuit to recover the amount due from the liable party.
10. In which case is it NOT required to serve a notice of transfer?
(i) When a property deed is transferred.
(ii) When a negotiable instrument is transferred.
(iii) When a vehicle title is transferred.
(iv) When ownership of a house is transferred.
Ans: (ii) When a negotiable instrument is transferred.
11. According to the legal presumption regarding negotiable instruments, what is assumed about the drawing, acceptance, and endorsement of the instrument?
(i) They are done without consideration.
(ii) They are done for consideration.
(iii) They are only valid if notarized.
(iv) They are done as a favour.
Ans: (ii) They are done for consideration.
12. Under Sections 118 and 119 of the Negotiable Instruments Act, 1881, it is presumed that a negotiable instrument is accepted within a reasonable time. What does this imply?
(i) The instrument is accepted immediately upon issuance.
(ii) The instrument is accepted after maturity.
(iii) The instrument is accepted within a reasonable time before its maturity.
(iv) The instrument is never accepted.
Ans: (iii) The instrument is accepted within a reasonable time before its maturity.
13. Which of the following is NOT a legal presumption regarding negotiable instruments under Sections 118 and 119?
(i) The instrument is drawn for consideration.
(ii) The date on the instrument is the date it was drawn.
(iii) The instrument is presumed to be valid until canceled.
(iv) The instrument is accepted within a reasonable time before maturity.
Ans: (iii) The instrument is presumed to be valid until canceled.
14. According to Section 4 of the Negotiable Instruments Act, 1881, which of the following is NOT considered a promissory note?
(i) A bank note.
(ii) An instrument with an unconditional undertaking to pay.
(iii) A written instrument signed by the maker.
(iv) An instrument promising payment to a certain person.
Ans: (i) A bank note.
15. Who must sign a promissory note for it to be valid under Section 4 of the Negotiable Instruments Act, 1881?
(i) The bearer of the note.
(ii) The maker of the note.
(iii) The bank.
(iv) The payee of the note.
Ans: (ii) The maker of the note.
