Briefly explain the benefits of maintaining a Bills Payable Book and
state how is its posting is done in the ledger?
Answers
The benefits of maintaining a bills payable book are proper records of bills payable and display of all information at a glance. The posting in bills payable book is done in the ledger through following steps.
Explanation:
A bills payable book is a secondary book that is used for the purpose of accounting. In this book, all bills of exchange which a firm has to pay, are recorded.
The benefits of maintaining a bills payable book are as follows:
i. It provides benefits of proper records: It records information about the entries of payable, such as bill date, amount, name of the Drawer, and cash book folio.
ii. Information at a glance: It benefits the companies by providing all payable details at a single place and keeps the payment system flexible.
The posting in bills payable book is done in the ledger through these steps:
a. The posting is done by making entries to the debit side of the creditor's account.
b. The account of bill payable shows liability of the acceptor and therefore, has a credit balance always.
c. The credit balance of bill payable account on a specific date should be similar to the total amount of bills payable that are presented for the payment.