why do you maintain bill book separately
Answers
Bills Receivale Book and Bills Payable Book both record the transactions separately because of nature of transactions involved. Bills Receivable Book records all the receivable for the business and this total of all the receivables are transferred to the ledger for a given accounting period. On the other hand, Bills Payable book records all the payables by the business. The person who draws the BoE is called the drawer and the customer on whom it is drawn is called the acceptor or drawee.
Bills Payable account usually has a credit balance as it is to be paid on maturity and acts as liability for the business. Howerver, because Bills Receivable represents amount to be received by the business, it acts as an asset for the business, thus, usually carries a debit balance.
E.g. (i) Drew on Mr. X, debtor (Bill No. 123) at two months after date for Rs 4,000- It will be recorded in Bills Receivable Account as amount is to be received by business.
(ii) Accepted Mr PQR, creditor's draft for Rs 10,400- This would be recorded in Bills Payable Account as amount is payable by the business.
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