Question

On acceptance of bill - the drawee, debit which of these accounts?

• A. Drawer's A/c.
• B. Bills Receivable A/c.
• C. Bills Payable A/c.
• D. Endorse A/c.

Answer 1

Answer: (A)

Drawer's A/c.

In the books of accounts of the drawee (debtor) the following entries of credit purchase & acceptance of bill is passed.

$1$. Entry for credit purchase	$2$. Entry for acceptance of bill	$3$. Net effect of both the entries
Purchase A/c. ------------------Dr.	Drawer (Creditor) A/c. --------------Dr.	Purchase A/c. ------------------Dr.
To Drawer (Creditor) A/c.	To Bills payable A/c.	To Bills payable A/c.

In actual only the $1$st & the $2$nd entries are passed the $3$rd entry shown in the table above is just to understand the net effect of these entries. So when the drawee accepts the bill what he does in the real sense is that he shifts the amount of liability from the Drawer (creditor) A/c. to Bills payable A/c. And so ultimately what is being reflected in the books of the Drawer(creditor) is that his purchase A/c. is debited withe amount of purchases made and the bills payable A/c. is credited, with the same amount and therefore reflecting as a liability instead of creditor A/c. So in order to get this desired result, on acceptance of bill the drawee debits the account of the Drawer(debtor).