India's #1 AI Tutorimportant-questions · Accountancy · Chapter 8

Important Questions: CBSE Class 11 Accountancy Chapter 8 Bills of Exchange

Bills of Exchange form the foundation of negotiable instruments in CBSE Class 11 Accountancy. This chapter introduces you to trade credit documentation used widely in Indian business—how a creditor (drawer) orders a debtor (drawee) to pay. Questions range from 1-mark term identification to 5-mark integrated problems involving acceptance, endorsement, discounting, renewal, and dishonour, making it one of the highest-scoring yet tricky chapters if journal entries are not practiced systematically.

Your child's private AI tutor — trained on NCERT.

3-day free trial · ₹1 to start · Cancel anytime.

Start 3-day free trial →

Key takeaways

✓Chapter 8 Bills of Exchange typically carries 8-12 marks in the CBSE Class 11 Accountancy annual exam, tested through MCQs and numerical problems.
✓A bill of exchange is a written order by the drawer to the drawee to pay a certain sum to the payee; it becomes valid only after acceptance.
✓Accounting entries differ for the drawer (bills receivable account) and the drawee (bills payable account) at acceptance, discounting, and dishonour stages.
✓Discounting a bill means endorsing it to a bank before maturity for immediate cash minus discount charges; the discount is debited to discount account.
✓Dishonour of a bill requires reversing the original entries and debiting the party account with bill amount plus noting charges.
✓Renewal of a bill involves cancelling the old bill and drawing a fresh bill for the principal plus interest, commonly tested in 5-mark questions.
✓Common mistakes include confusing drawer and drawee entries, forgetting to add noting charges on dishonour, and incorrect calculation of discount or rebate periods.

Chapter Overview and Marks Weightage in CBSE Exam

Chapter 8 Bills of Exchange is part of Unit 3 (Recording of Transactions II) in the CBSE Class 11 Accountancy syllabus. The chapter typically carries 8 to 12 marks in the annual board exam, distributed across multiple formats. Expect one 1-mark MCQ or very short answer on definitions or terms, one 2-mark question on distinguishing concepts, and at least one 3-mark or 5-mark numerical problem covering the full life-cycle of a bill—from drawing and acceptance through discounting or renewal to dishonour. NCERT textbook problems and examples are frequently adapted, so working through Exercise 8 is non-negotiable. The chapter tests both theoretical clarity and precise double-entry mechanics, particularly journal entries in the books of both parties.

Weightage: 8-12 marks out of 80 in the annual exam (Theory Paper).
Question types: 1-mark MCQ/definition, 2-mark short answer, 3-mark journal entries, 5-mark comprehensive numerical.
Common topics: Concept of B/E, difference from promissory note, accounting treatment for drawer and drawee, discounting, renewal under rebate, dishonour with noting charges.
NCERT Exercise 8 contains 15 questions; at least 2-3 appear verbatim or with minor value changes in CBSE papers.

1-Mark Questions: MCQ and Very Short Answer

One-mark questions test your grasp of terminology and basic concepts. CBSE often uses negative marking in MCQs during unit tests, so read each option carefully. These questions take 30 seconds each but contribute to your final score. Focus on definitions from NCERT and differences between related terms. Practise identifying the three parties—drawer, drawee, and payee—in a given scenario. Below are five representative 1-mark questions with model answers that follow the CBSE marking scheme exactly.

2-Mark Questions with Model Answers

Two-mark questions require short definitions or simple journal entries. CBSE allocates one mark for the concept and one for clarity or correct format. You have roughly 2 minutes per question. Stick to NCERT terminology—write 'Bills Receivable A/c' not 'BR A/c' and always mention 'being acceptance received' in narrations. These questions often ask you to distinguish between a promissory note and a bill of exchange or to state the entry in one party's books only. Below are four 2-mark questions that appeared in recent CBSE sample papers and school pre-boards across India.

3-Mark Questions: Journal Entries and Short Numericals

Three-mark questions form the backbone of this chapter. CBSE typically awards 1 mark for each correct journal entry and 0.5 mark for proper narration. Expect scenarios involving acceptance, discounting, or dishonour. You must show entries in both the drawer's and drawee's books or handle a single transaction with noting charges. Always mention the date if given, use the account titles exactly as in NCERT, and underline totals. Practice writing narrations in parentheses immediately below each entry. Below are three carefully selected 3-mark questions that mirror the 2023 and 2024 CBSE question papers.

5-Mark Questions: Comprehensive Numericals and Case-Based Problems

Five-mark questions test the entire lifecycle of a bill or involve renewal scenarios. CBSE allocates marks step-wise: 1 mark for the opening entry, 1 for the intermediate transaction (discounting or endorsement), 1 for cancellation on renewal, 1 for the fresh bill entry, and 1 for correct interest calculation and narration. These questions often integrate concepts from Chapter 6 (Trial Balance) by asking for ledger postings or from Chapter 7 (Depreciation) by adding interest. Read the question twice, identify all dates, and calculate interest or discount before writing entries. Below are four 5-mark problems that reflect the difficulty and structure of CBSE board exams held in Delhi, Pune, and Chennai centres in 2023-2024.

How CBSE Frames Questions from This Chapter

CBSE question-setters follow a predictable blueprint for Bills of Exchange questions. The board draws heavily from NCERT Exercise 8 and the illustrative examples in the chapter. Numerical problems always specify dates so you can calculate periods for discount or interest. In 3-mark questions, expect one-sided entries (either drawer or drawee); in 5-mark questions, both sides plus an intermediate event like endorsement or renewal. Case-based questions introduced in 2023 present a short paragraph describing a business transaction chain—read carefully to identify who is the drawer, who endorses, and who ultimately pays. MCQs often use negative statements: 'Which of the following is NOT true about a bill of exchange?' Practice previous years' Delhi, Outside Delhi, and Foreign sets to spot recurring patterns. The marking scheme awards partial marks for correct debit-credit even if narration is missing, but full marks require the complete double entry with proper narration.

NCERT reliance: At least 60% of numerical values and scenarios are adapted from Exercise 8 and chapter examples.
Date specification: Every numerical problem states drawing date, tenure, and intermediate events to test period calculation.
Both-books requirement: 5-mark questions mandate entries in both drawer's and drawee's books; omitting one side loses 2-3 marks.
Noting charges: Almost every dishonour question adds noting charges (₹200-₹500) to test whether you debit the drawee's account correctly.
Interest on renewal: Standard rate is 12%, 15%, or 18% p.a.; always calculate for the exact period (number of months/12).
Case-based format: A 4-5 line business story followed by 4 sub-questions (1+1+2 marks), total 4-5 marks; introduced from 2022-23 session.

Common Mistakes and How to Avoid Them

Students lose 30-40% of marks in this chapter through avoidable errors. The most frequent mistake is reversing the drawer and drawee entries—remember the drawer debits Bills Receivable (asset) while the drawee debits the drawer's personal account and credits Bills Payable (liability). Another pitfall is forgetting to add noting charges to the drawee's account on dishonour; the entire amount (bill value plus noting charges) must be debited. When discounting, many students credit the debtor's account instead of Bills Receivable. In renewal problems, forgetting to first cancel the old bill or miscalculating interest for the exact period costs marks. During exams, write the date beside each entry even if the question does not ask for it—this keeps your period calculations transparent. Finally, narration errors: never write vague phrases like 'being transaction'; use exact NCERT wording such as 'being acceptance received' or 'being bill dishonoured'. Cross-check every entry by ensuring total debits equal total credits before moving to the next question.

Drawer vs Drawee confusion: Drawer (creditor) debits Bills Receivable; Drawee (debtor) credits Bills Payable. Make a quick mnemonic: 'Drawer Draws = B/R Dr.'
Omitting noting charges: Always add noting charges to the principal when bill is dishonoured; debit the full ₹(bill + charges) to the drawee's account.
Discount calculation: Use the formula Discount = Amount × Rate/100 × Period/12. Period is from discounting date to due date, not from drawing date.
Renewal interest: First cancel the old bill (debit drawee's A/c, credit B/R A/c), then draw the fresh bill including interest (B/R Dr., credit drawee + interest).
Missing narration: CBSE deducts 0.5 mark per entry if narration is absent or incorrect. Stick to NCERT standard phrases.
Ignoring grace days: In India, bills attract 3 days of grace unless stated otherwise; due date = tenure + 3 days from the date of bill.

Quick Revision Tips Two Weeks Before the Exam

With two weeks to go, focus on speed and accuracy rather than covering new ground. Solve one 5-mark question daily under timed conditions—set a 10-minute timer and write full journal entries with narrations. Create a one-page formula sheet listing discount formula, interest formula, and the standard entry formats for acceptance, discounting, endorsement, renewal, dishonour, and retirement. Revise the definitions and differences (promissory note vs bill of exchange, drawer vs drawee, endorsement vs discounting) every alternate day; these fetch easy 1-2 marks. Practice the NCERT Exercise 8 questions at least twice; mark the tricky ones and redo them three days before the exam. On the final day, do not attempt new problems—simply read your formula sheet and the common mistakes list. During the exam, if a 5-mark question looks complex, break it into mini-transactions (acceptance → discounting → dishonour) and write entries step-by-step; partial marks will accumulate even if you miss the final step.

Daily drill: One 5-mark question under 10-minute timer; check against NCERT solutions, not online answer keys.
Formula sheet: Discount = P × R/100 × T/12; Interest = P × R/100 × T/12; Due date = Drawing date + Tenure + 3 grace days.
Definitions flashcards: Write each term (acceptance, discounting, endorsement, noting charges, rebate, retirement) on one side, definition on reverse; shuffle and self-test.
NCERT Exercise 8: Solve Questions 4, 7, 9, 11, and 15 twice—these cover acceptance, discounting, renewal, dishonour, and retirement.
Mock test: Attempt the 2023 CBSE sample paper Chapter 8 section (available on cbse.gov.in) in one sitting; score yourself strictly using the marking scheme.
Exam strategy: Solve 3-mark questions before 5-mark; if stuck on a sub-part, write the next entry and return later—CBSE awards step-wise marks.

How CBSETUTOR.ai Helps You Master Bills of Exchange

Practising Bills of Exchange problems at midnight when doubt strikes is now seamless with CBSETUTOR.ai. Simply snap a photo of any NCERT question or your own practice problem, upload it, and receive a step-by-step worked solution within seconds—complete with journal entries, narrations, and calculations explained in simple language. The AI tutor is trained on CBSE marking schemes, so every answer mirrors board exam standards. Whether you are stuck on calculating discount periods, confused about drawer versus drawee entries, or need to verify your renewal problem working, CBSETUTOR.ai provides instant, accurate help 24×7. Parents across Delhi, Bangalore, and Mumbai report that their children gain confidence by cross-checking homework solutions and clearing conceptual doubts without waiting for the next tuition class. At a flat ₹999 per month for every class from 6 to 12, you get unlimited question solving, chapter-wise tests, and progress tracking. Start with the 3-day free trial—no credit card required—and experience how AI-powered learning makes Accountancy less intimidating and more scoring.

Photo upload solver: Snap any Bills of Exchange question; get journal entries, calculations, and narrations explained step-by-step in under 30 seconds.
24×7 availability: Clear doubts at 11 PM or 5 AM—no appointment needed, no waiting for tuition hours.
CBSE-aligned answers: Every solution follows NCERT terminology and CBSE marking scheme; narrations match board exam expectations exactly.
Chapter-wise tests: Auto-generated quizzes on Bills of Exchange with instant grading and detailed explanations for wrong answers.
Affordable pricing: ₹999/month for all subjects and classes (6-12); one price whether you are in Class 11 or Class 12, studying one chapter or the full syllabus.
3-day free trial: Explore unlimited question solving, video solutions, and mock tests without entering payment details; cancel anytime.

Practice Schedule for the Final Month

Effective preparation requires a structured weekly plan. In Week 1, cover theory and definitions: read NCERT Chapter 8 thoroughly, underline key terms, and write short notes on acceptance, discounting, endorsement, renewal, dishonour, and retirement. In Week 2, solve all NCERT Exercise 8 questions in your notebook; self-check against the textbook solutions and mark errors. Week 3 is for previous years' questions: download the last three years' CBSE Class 11 Accountancy papers from the official CBSE website, extract Bills of Exchange questions, and solve under exam conditions. In Week 4, focus on speed—redo the toughest 5-mark problems from Exercise 8, attempt two mock sets from your school or coaching material, and revise your mistake log daily. Dedicate 45 minutes daily to this chapter throughout the month; consistency beats last-minute cramming. Track your accuracy: aim for 100% in 1-mark and 2-mark questions and at least 80% in 5-mark numericals by the third week. If your accuracy remains below 70%, identify whether the issue is conceptual (drawer-drawee confusion) or computational (discount calculation errors) and drill those specific sub-topics.

Week 1 (Theory): Read NCERT Chapter 8, prepare definition flashcards, watch one explanatory video on Bills of Exchange.
Week 2 (NCERT Practice): Solve Exercise 8 questions 1-15 in sequence, self-correct, note down repeated mistakes.
Week 3 (PYQs): Solve 2020, 2022, and 2023 CBSE papers' Bills of Exchange section; compare your answers with the official marking scheme.
Week 4 (Speed & Revision): Redo top-5 tough questions, take two full-length mock tests, revise common mistakes list.
Daily target: 45 minutes—15 min theory revision + 30 min problem solving; track accuracy in a notebook.
Final 3 days: No new questions; revise formula sheet, skim NCERT examples, and sleep well the night before the exam.

Frequently asked questions

How many marks does Chapter 8 Bills of Exchange carry in the CBSE Class 11 Accountancy exam?+

Chapter 8 typically carries 8 to 12 marks in the CBSE Class 11 Accountancy annual board exam. Expect one 1-mark MCQ on definitions, one 2-mark short answer, and at least one 3-mark or 5-mark numerical problem covering acceptance, discounting, renewal, or dishonour scenarios.

What is the difference between a bill of exchange and a promissory note?+

A bill of exchange is drawn by the creditor (drawer) ordering the debtor (drawee) to pay, has three parties, and requires acceptance. A promissory note is written by the debtor (maker) promising to pay the creditor (payee), has two parties, and does not need acceptance. Bills can be discounted or endorsed; promissory notes typically cannot.

How do I calculate discount when a bill is discounted with a bank?+

Use the formula: Discount = Bill Amount × (Rate / 100) × (Period / 12). Period is the number of months from the discounting date to the due date. Cash received = Bill Amount − Discount. Debit Bank and Discount accounts; credit Bills Receivable account in the drawer's books.

What entries are passed when a bill is dishonoured and noting charges are paid?+

In the drawer's books: Debit Drawee's Account with (Bill Amount + Noting Charges), Credit Bills Receivable Account with Bill Amount, and Credit Cash Account with Noting Charges. In the drawee's books: Debit Bills Payable Account and Noting Charges Account, Credit Drawer's Account with the total.

What is renewal of a bill and how is interest calculated?+

Renewal occurs when the drawee cannot pay on the due date and requests a fresh bill. The old bill is cancelled, and a new bill is drawn for the principal plus interest for the extended period. Interest = Principal × (Rate / 100) × (Extended Period / 12). Both cancellation and fresh acceptance must be recorded in both parties' books.

Which account is debited in the drawer's books when acceptance is received?+

Bills Receivable Account is debited in the drawer's books when the drawee accepts the bill. The corresponding credit entry goes to the Drawee's (Debtor's) personal account, reducing the outstanding receivable and converting it into a negotiable instrument.

What are noting charges and who pays them?+

Noting charges are fees paid to a notary public when a bill is dishonoured, to legally record the fact of dishonour. The drawer initially pays these charges but recovers them from the drawee by debiting the drawee's account with the bill amount plus noting charges.

How is retirement of a bill under rebate treated in accounts?+

Retirement means the drawee pays before the due date and receives a discount (rebate) for the unexpired period. Rebate = Bill Amount × (Rate / 100) × (Unexpired Days / 365). In the drawee's books: Debit Bills Payable, Credit Cash with (Bill Amount − Rebate), and Credit Rebate Account. In the holder's books: Debit Cash and Rebate, Credit Bills Receivable.

Can CBSETUTOR.ai help me solve Bills of Exchange numericals at any time?+

Yes. CBSETUTOR.ai offers 24×7 photo-upload question solving. Snap a picture of any Bills of Exchange problem—from NCERT, RD Sharma, or your school worksheet—and receive a step-by-step solution with journal entries, narrations, and calculations within seconds. The platform is aligned with CBSE marking schemes and costs ₹999/month for all classes. A 3-day free trial is available without credit card details.

What is the most common mistake students make in Bills of Exchange questions?+

The most common mistake is reversing the drawer and drawee entries. Remember: the drawer (creditor) debits Bills Receivable Account and credits the Drawee's Account on acceptance; the drawee (debtor) debits the Drawer's Account and credits Bills Payable Account. Forgetting to add noting charges on dishonour is the second most frequent error.

Related resources

CBSE Class 11 Accountancy Chapter 8 Bills of Exchange Worksheet with Answers Class 11 Accountancy Chapter 8 Bills of Exchange — Formulas & Key Points CBSE Class 11 Accountancy Chapter 7 Depreciation, Provisions and Reserves Worksheet with Answers Important Questions: CBSE Class 11 Accountancy Chapter 7 Depreciation, Provisions and Reserves AI Tutor for Class 11: The Smart Alternative to Tuition AI Tutor for Class 11 Accountancy: Learn Faster with Instant Help Class 9 Accountancy Chapter 1: Introduction to Accounting Previous Year Questions (2020–2025) with Solutions Important Questions: CBSE Class 9 Mathematics Chapter 2 Polynomials

Keep learning — related guides

Class 11Accountancy

Class 11 Accountancy Chapter 10 Computers in Accounting — Formulas & Key Points

Class 11Accountancy

Important Questions: CBSE Class 11 Accountancy Chapter 10 Computers in Accounting

Class 11Accountancy

CBSE Class 11 Accountancy Chapter 10 Computers in Accounting Worksheet with Answers

Class 11Accountancy

Important Questions: CBSE Class 11 Accountancy Chapter 9 Financial Statements — I & II

Class 11Accountancy

Class 11 Accountancy Chapter 9 Financial Statements — I & II — Formulas & Key Points

Class 11Accountancy

CBSE Class 11 Accountancy Chapter 9 Financial Statements — I & II Worksheet with Answers

Ready to give your Class 11 child the tutor that never sleeps?

CBSETUTOR.ai covers every chapter in the Class 11 NCERT syllabus — Maths, Science, Social Science, English, Hindi and more. 24×7. Patient. Unlimited. 3-day free trial.

Start your child's 3-day free trial →