Briefly explain the benefit of maintaining a Bills Payable Book and state how is its posting is done in the ledger?
Briefly explain the benefit of maintaining a Bills Payable Book and state how is its posting is done in the ledger?
A Bills Payable Book is designed as a summary of information regarding the various acceptances by a drawee. It contains almost all the details of Acceptance (Bills Payable) like bill date, Drawer's name, amount, term, place of payment, cash book folio etc for future reference.
The advantage of preparing the Bills payable book is that we get all the information at a glance, Moreover, we can get an overall idea about our creditors and keep our payment system smooth and up to date. The Bills payable book, like any other subsidiary book, is totalled periodically. This total is debited to the "Bills payable Account" whereas the account of every individual creditor whom the bills paid is debited in the ledger.
The posting from this books is made to the debit of the account of every creditor to whom acceptance has been given and the periodical total of the books is credited to the 'Bills Payable Account' in the Ledger. The bills payable account representing the liability of the acceptor in respect of bills accepted by him, always have a credit balance, if any. The credit balance of this account on any particular date must be the same as the total amount worth of bills payable yet to be presented for payment as ascertained from the bills payable book.
A Bills Payable Book is designed as a summary of information regarding the various acceptances by a drawee. It contains almost all the details of Acceptance (Bills Payable) like bill date, Drawer's name, amount, term, place of payment, cash book folio etc for future reference.
The advantage of preparing the Bills payable book is that we get all the information at a glance, Moreover, we can get an overall idea about our creditors and keep our payment system smooth and up to date. The Bills payable book, like any other subsidiary book, is totalled periodically. This total is debited to the "Bills payable Account" whereas the account of every individual creditor whom the bills paid is debited in the ledger.
The posting from this books is made to the debit of the account of every creditor to whom acceptance has been given and the periodical total of the books is credited to the 'Bills Payable Account' in the Ledger. The bills payable account representing the liability of the acceptor in respect of bills accepted by him, always have a credit balance, if any. The credit balance of this account on any particular date must be the same as the total amount worth of bills payable yet to be presented for payment as ascertained from the bills payable book.
