nature of account

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.

Hope you have understood. If not, ask again without hesitation.

good reply by fazid.........

Originally posted by : Faiz Ahmed
	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.   Hope you have understood. If not, ask again without hesitation.

Really good explanation Faiz.. :)

HaY...Great Explanation by Faiz...keep it up dude..............

Originally posted by : Faiz Ahmed
	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.   Hope you have understood. If not, ask again without hesitation.

 beautiful explanation

Originally posted by : Faiz Ahmed
	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.   Hope you have understood. If not, ask again without hesitation.

Nice explanation friend

Wonderful explantion

I am seeing such a post from long time

Superb Explanation...!!! Thank you...!!