Anuj jain (Self employed) (40 Points)
13 May 2018When seller draws bill on purchaser seller does following entry......
Bills receivable A/C Dr.
To Debtors A/c
According to modern approach b/r is asset so we debit it but if do entry by traditional approach than can any body tell.me sice bills receivable is personal acc ....how can we apply rule debit the receiver
AMIT KAPOOR
(SELF EMPLOYED)
(491 Points)
Replied 14 May 2018
https://www.caclubindia.com/forum/nature-of-account-80335.asp
AMIT KAPOOR
(SELF EMPLOYED)
(491 Points)
Replied 14 May 2018
Both B/R and B/P are personal A/cs… To be more apt, they are Representative Personal A/c Why?? Both these accounts represent Debtors or creditors of a particular entity. The rule followed to pass entry in such cases is: Dr. the receiver of the benefit Cr. The giver of the benefit. In the above rule I have highlighted the inner meaning of rule. Suppose when B/R is issued, it’s Dr. because that B/R represents Debtor from whom money is receivable... In a way our entity has given those debtors a benefit i.e. credit so as per rule we Dr. B/R a/c( at the time of issue). Similarly B/P which is issued against creditors and it represent the liability towards creditors... It’s credited because Creditors have given us the benefit i.e. credit. So we Cr. B/P A/c(at the time of issue) To be more clear and to the point, Both B/R and B/P cannot be Real A/c… Real a/c applies to assets of an entity.. These B/R and B/P are not assets because they are not yet acquired as like Plant, building etc. They are yet to be encashed. Asset means which has been acquired and has some value. Hence, Bills Receivable and Bills Payable are Representative Personal A/cs.
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