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vikas ghuwalewala (owner)     27 April 2010

nature of account

what is the nature of bills receivables and bills payable account ??? 

is it personal or real or why???



 13 Replies


(Guest)

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.

7 Like
CMA.Baskar.V

CMA.Baskar.V (Cost Accountant)     27 April 2010

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

CA Himanshu Bansal

CA Himanshu Bansal (Risk Manager)     27 April 2010

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.. :)

1 Like
Santhosh Poojary

Santhosh Poojary (SIEMPRE AHÍ PARA TI)     28 April 2010

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

vikash rathi

vikash rathi (Chartered Accountant)     28 April 2010

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.

agree with it ....really good reply.......
Vikas Gupta

Vikas Gupta (CHARTERED ACCOUNTANT)     28 April 2010

Originally posted by : SAN...
HaY...Great Explanation by Faiz...keep it up dude..............
sivaram

sivaram (Asst Mgr-Taxation)     28 April 2010

 

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

Renuka

Renuka (CA FINAL)     28 April 2010

 

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

praveen

praveen (Chartered Accountant)     28 April 2010

Wonderful explantion

I am seeing such a post from long time

VUELVE

VUELVE (CA- Student)     29 April 2010

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

vijay

vijay (lecturer)     15 January 2018

Bills of exchange is real account as per Indian negotiable instruments act it is negotiable instruments that can be endorse and we treat as current asset. It is current asset after acceptance from acceptor.
Fahad

Fahad (Auditor)     30 November 2018

Can u please explain more? And can I get ur contact details?
Indira Priyadarsini Kota

Indira Priyadarsini Kota (Student)     19 January 2021

What is the nature of revaluation account?

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