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Single Entry - Clarifictn

Whizkid (student) (640 Points)

25 September 2010

Generally while preparing creditors a/c under single entry system...We normally route bills payable if given in de problem thru this account...i.e we credit bills payable in Creditors A/c... Can anyone tel me why do we do this..? I couldnt get it conceptually.... The same is de reverse case of Bills Rec/bl in debtors A/c....

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CA.G.Muguntha Narayanan (Internal Auditor at TVS Motors) (2195 Points)
Replied 25 September 2010

Dear Friend,

bills payable is a credit account. SO it will be having a credit balance. In single entry, we are routing it through creditors. So, this account has to be closed. If u have to close a credit balance, u have to naturally debit it. SO u are debiting BP and crediting Creditrs. Hence, in the Creditors account, BP gets credit. Same is the case of BR also

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Harsha (Chartered Accountant CS (Final)) (227 Points)
Replied 25 September 2010

Dear Friends,

In Single Entry balance, some times we will be find difference, that difference should be adjusted in purchase a/c(Credit purchase of goods), Bank a/c(Amount paid to Drs) & in Bills payable a./c.

For adjustment in Bills payable a/c, we have two cases,

1) Credit side of Creditors a/c is excess: In such a case, we treat that the creditor is submitted Bills for the debt and the same is transferred to Bills payable a/c. So, Creditors a/c will be reduced and the same is added in BP a/c. Following entry should be passsed

Creditors a/c Dr

To BP a/c

2)Debit side of Creditors a/c is excess : In this case, we treat that the Bills payable will converted to Creditors. This will happen when there is a dishonour of the Bills given to the creditors. As a result, Creditors a/c will be increased. Following entry will be passed.

BP a/c Dr

Creditors a/c

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vinod jain (Learner) (40 Points)
Replied 29 September 2010

Bills Payable as the name suggests these are the bils which are to be still paid by us. The same applies for bills receivable.

Bills payable is the aggregate amount of creditors at the end of the year who all have drawn bills on us and we have accepted those bills, but the bills are gonna mature in the next year.

hence bills payable are routed through creditors A/c