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JAIIB AFM Unit 8 — Bills of Exchange: Free MCQs with Explanations

By Swarnakshi Jha (ex-banker) · Updated 20 September 2026 · Paper 3 of the November 2026 cycle (28 November 2026)

This page is a free slice of our JAIIB AFM question bank for Unit 8 — Bills of Exchange (Module A — Basic Accounting and Finance). The Mock Centre holds 75 questions on this unit alone, every one with a why-right / why-wrong explanation; below are the facts examiners keep returning to, five of those questions to try, and the traps that cost marks.

AFM · Module A75 MCQs in the Mock Centre5 free belowPaper on 28 November 2026

Key facts examiners test from this unit

  1. Bill of exchange = Sec 5 (unconditional ORDER, 3 parties, creditor draws, acceptance needed); promissory note = Sec 4 (unconditional PROMISE, 2 parties, debtor makes, no acceptance); cheque = Sec 6 (bill on a banker, always on demand).
  2. Money only — an order to deliver goods is not a negotiable instrument.
  3. Due date = maturity + 3 days of grace; grace only for non-demand instruments; holiday → PREVIOUS working day.

5 free practice questions — tap an option

Five basic questions from this unit. Answers lock on the first tap, exactly as in the exam, and a short explanation opens underneath. The Mock Centre adds the moderate and tough questions, why every other option is wrong, the concept capsule and the exam tip — with your score and revision dates tracked.

Question 1 of 5
A bill of exchange has how many parties?
Why (b): THREE parties: drawer (creditor), drawee (debtor, 'acceptor' on acceptance) and payee — drawer and payee often coincide.
Question 2 of 5
In a bill of exchange, the 'Drawee' is:
Why (b): The DRAWEE is the person ON WHOM the bill is drawn — the debtor/buyer; on acceptance he becomes the ACCEPTOR.
Question 3 of 5
The period of a bill is called its:
Why (b): The bill's period = its TERM or TENOR — the run from drawing to maturity.
Question 4 of 5
A 'Notary Public' is:
Why (b): The notary public is a GOVERNMENT-appointed officer empowered to note and protest dishonoured instruments.
Question 5 of 5
For accounting purposes, the distinction between a bill of exchange and a promissory note is:
Why (b): No accounting distinction between a bill and a promissory note — the receiver books a Bills Receivable (asset, real account), the payer books a Bills Payable (liability, real account).
0 of 5 answered.

Traps in this unit

Confusable AConfusable BThe difference
Bill of exchange (Sec 5)Promissory note (Sec 4)Order by creditor, 3 parties, acceptance needed vs promise by debtor, 2 parties, none
DrawerDraweeDraws the bill (creditor) vs accepts and pays (debtor → 'acceptor')
Practise all 75 questions on Unit 8. The free demo opens a slice of every subject with the same explanations; the AFM Online-only pass unlocks all 1,681 AFM questions, the full and module mocks, Smart Revision and the Readiness Score for one year (₹1,299). Not sure where you stand? Take the free 10-question test first.
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Independent study aid — not affiliated with, endorsed by, or sponsored by the Indian Institute of Banking & Finance (IIBF). Exam pattern, dates, fees and passing criteria are set by IIBF — always confirm the current rules at iibf.org.in. Regulatory figures verified as of September 2026; verify from official sources before relying on them in practice.