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Reassessment of Liabilities

Bills receiva...

Question

Bills receivable discounted but not due till date of final accounts is shown as _________.

A

Liabilities

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B

Assets

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C

P & L A/c

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D

Foot notes(Contingent liabilities)

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Solution

The correct option is B Foot notes(Contingent liabilities)
Though the bills have been discounted they are not due which makes it contingent liability, an off balance sheet item.
Since outcome is dependent on future due to existence of past event.

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Q. What Journal entries would be passed for discharge of following unrecorded liabilities on the dissolution of a firm of partners A and B:
(a) There was a contingent liability in respect of bills discounted but not matured of ₹ 18,500. An acceptor of one bill of ₹ 2,500 became insolvent and fifty paise in a rupee was recovered. The liability of the firm on account of this bill discounted and dishonoured has not so far been recorded.
(b) There was a contingent liability in respect of a claim for damages for ₹ 75,000, such liability was settled for ₹ 50,000 and paid by the partner A.
(c) Firm will have to pay ₹ 10,000 as compensation to an injured employee, which was a contingent liability not accepted by the firm.
(d) ₹ 5,000 for damages claimed by a customer has been disputed by the firm. It was settled at 70% by a compromise between the customer and the firm.

Q. State whether the following statements are True or False:
Income due but not received is a liability.

Q. What Journal entries would be passed for following unrecorded liabilities on the dissolution of a firm partners A and B:
(a) There was a contingent liability in respect of bills discounted but not matured of Rs. 18,500. An acceptor of one bill of Rs. 2,500 became insolvent and fifty paise in a rupee was recovered. The liability of the firm on accout of this bill discounted and dishonoured has not so far been recorded.
(b) There was a contingent liability in respect of claim for damages for Rs. 75,000, such liability was settled for Rs. 50,000, and paid by the partner A.
(c) Firm will have to pay Rs. 10,000 as compensation to an injured employee, which was a contingent liability not accepted by firm.
(d) Rs. 5,000 for damages claimed by a customer has been disputed by the firm. It was settled at 70% by a compromise between the custorner and the firm.

Q. __________ is a summary of all assets and liabilities on a particular date.

Q. X draws a bill of Rs. 17,000 on Y for 3 months for the amount due, which Y accepts and returns it to X. X retains the bill till due date and Y pays on the due date. On payment of Y, ______ account will be credited in the books of Y.

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