The Review School of Accountancy
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QUIZ- NEGOTIABLE INSTRUMENTS LAW (PART II)
1. A negotiable instrument must contain a promise or order to pay a sum certain in money, except a) Which must be payable to order or bearer
b) That must be in writing
c) Which must be an unconditional promise or order
d) The payee must be identified
2. The following are the functions of a negotiable instruments, EXCEPT: a) It operates as a substitute for money.
b) It is a means of creating and transferring of credits. c) It facilitates the sale of goods and increases the purchasing medium in circulation. d) It is legal tender
3. An instrument is payable to bearer except:
a) The only and last endorsement is in blank.
b) Payable to ”CASH”
c) It is payable to a specified person or bearer.
d) Payable to the order of the bearer.
4. An instrument that is payable to specified person or entity is… a) Negotiable because it complies with Section 1 of the law b) Not negotiable because it must be a payable to order or bearer. c) Negotiable because a specified person is a payee or bearer. d) Not negotiable because the payee is named.
5. A. An incomplete and already delivered instrument, if completed, and is negotiated to a holder in due course, is valid and effectual for all purposes in his hands. B. Such holder may enforce it as if it had been filled up strictly in accordance with the authority given and within a reasonable time. a) Both statements are true
b) First statement is false; second statement is true
c) Both statements are false
d) First statement is true; second statement is false
6. Where an incomplete instrument has not been delivered, it will not, if completed and negotiated without authority, be a valid contract as against any person whose signature was placed thereon before delivery in the hands of a a) Holder in due course
b) Holder not in due course
c) Holder for value
d) Any holder
7. Where this instrument is in the hands of a holder in due course, a valid delivery thereof by all parties prior to him so as to make them liable to him is conclusively presumed. This refers to- a) An incomplete and delivered instrument.
b) An incomplete and undelivered instrument.
c) A complete and undelivered instrument
d) None of the above
8. Distinction/s of a promissory note with a bill of exchange. a) Contains an unconditional order to pay
b) Involves three (3) parties
c) The issuer is primary liable
d) May be payable to bearer
9. The kind of signature operates as notice that the agent has but a limited authority to sign. a) Blank signature
b) Signature by procuration
c) Special endorsement
d) Forged signature
10. When a signature is forged or made without the authority of the person whose signature it purports to be, it is totally a) Negotiable
b) Assignable because it is not negotiable
d) Valid and transferable
11. Every negotiable instrument is deemed prima facie to have been issued for a valuable- a) Reason
d) Money or property
12. Where cause or consideration has at any time being given for the instrument, the holder is deemed a holder a) In due course
b) For value
c) Not in due course but for value
d) In due course and for value
13. Absence or failure of consideration is a matter of defense as against any person who is a) Holder in due course
b) Not a holder in due course
c) Holder for value
d) Not a holder for value
14. A party who has signed the instrument as maker. Drawer, acceptor, or endorser, without receiving value therefore, and for the purpose of lending his name to some other person. a) Accommodated party
b) Accommodation party...
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