Accountancy MCQs
Topic Notes: Accountancy
General Description
Plato
- Biography: Ancient Greek philosopher (427–347 BCE), student of Socrates and teacher of Aristotle, founder of the Academy in Athens.
- Important Ideas:
- Theory of Forms
- Philosopher-King
- Ideal State
1
How many parties are involved in a promissory note?
Answer:
Two parties
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.
2
Who is responsible for the preparation of a promissory note?
Answer:
Drawer
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.
3
Who is the party responsible for drafting a promissory note?
Answer:
Debtor
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.
4
What is the formal requirement for the creation of a valid promissory note?
Answer:
Written
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.
5
Which of the following elements is not a legal requirement for a valid promissory note?
Answer:
Acceptance
A promissory note is an instrument in writing containing an unconditional undertaking signed by the maker to pay a certain sum of money. Unlike a bill of exchange, a promissory note does not require acceptance by the drawee because the maker is the one who promises to pay the amount directly.
6
What is the fundamental nature of a promissory note?
Answer:
A promise
A promissory note is a legal financial instrument in which the issuer makes an unconditional promise in writing to pay a specified sum of money to the payee at a fixed or determinable future time. It is essentially a written promise to pay, distinct from a bill of exchange which is an order to pay.
7
Which of the following is not a standard characteristic of a promissory note?
Answer:
It is designated for payment to whoever possesses it
A promissory note is a written promise to pay a specific person or their order, rather than being a bearer instrument payable to whoever possesses it. It must be signed by the maker and contain an unconditional promise to pay a definite sum of money to a specified individual or entity.
8
A promissory note is issued by which party to whom?
Answer:
Maker, Payee
A promissory note is a legal financial instrument where the maker (the debtor) unconditionally promises to pay a specific sum of money to the payee (the creditor) at a specified future date or on demand. The maker is the person who signs the note, while the payee is the recipient of the payment.
9
How many parties are typically involved in the creation of a promissory note?
Answer:
Two
A promissory note is a financial instrument where one party (the maker or issuer) promises in writing to pay a determinate sum of money to another party (the payee) at a specified future date or on demand. Because it is a direct promise from the debtor to the creditor, it involves exactly two parties: the maker and the payee.