Question

Consider the following statement, while preparing annual financial statements, the balance of bills receivable account can be treated as.
I. An accrued income
II. An item of assets
III. A "personal account" balance
Of these statement.

• A. II and III are correct
• B. I and III are correct
• C. I and II are correct
• D. None of these

Answer 1

The correct option is A II and III are correct

• Accounts receivable represents revenue that has been both earned and billed but not yet received.
• Accounts receivable is recorded as an asset on the balance sheet.
• These B/R and B/P are not assets because they are not yet acquired as 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 Accounts.