what is the nature of bills receivables and bills payable account ???
is it personal or real or why???
vikas ghuwalewala (owner) 27 April 2010
what is the nature of bills receivables and bills payable account ???
is it personal or real or why???
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.
CA Himanshu Bansal (Risk Manager) 27 April 2010
| Originally posted by : Faiz Ahmed | ||
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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. |
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Really good explanation Faiz.. :)
Santhosh Poojary (SIEMPRE AHÍ PARA TI) 28 April 2010
HaY...Great Explanation by Faiz...keep it up dude..............
vikash rathi (Chartered Accountant) 28 April 2010
| Originally posted by : Faiz Ahmed | ||
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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. |
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Vikas Gupta (CHARTERED ACCOUNTANT) 28 April 2010
| Originally posted by : SAN... | ||
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HaY...Great Explanation by Faiz...keep it up dude.............. |
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sivaram (Asst Mgr-Taxation) 28 April 2010
| Originally posted by : Faiz Ahmed | ||
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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. |
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beautiful explanation
Renuka (CA FINAL) 28 April 2010
| Originally posted by : Faiz Ahmed | ||
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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. |
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Nice explanation friend
praveen (Chartered Accountant) 28 April 2010
Wonderful explantion
I am seeing such a post from long time
vijay (lecturer) 15 January 2018
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