WHAT ARE BILLS RECEIVABLE ?
A bill receivable is a bill of exchange drawn by an entity on its customer or debtor so as to serve as a proof of debt. In other words, it is a negotiable instrument or a legal agreement stating that the customer agrees to make the full payment of the debts of the business on a later date.
BILLS RECEIVABLE REGISTER
In a mid to large sized business where the number of bills exchanging hands is large in number, it is tough to journalize all receipt of bills. Therefore, a Bills receivable (B/R) book is used for the reason of recording the particulars of bills receivable. It is division of supplementary books in which we record all bills whose payment, we have to get from our client at the instance of maturity.
The B/R book is totaled at the end of every month . In this book the total of the amount column will be posted to the debit of the Bills Receivable Account & the accounts of the parties from whom the bills are received will be credited with the amounts appearing against their names.
Bills receivable account will usually have a debit balance. As a bill receivable is supposed to be received at maturity, it acts as a current asset for the business. Generally, every bill has a 3 day grace period.
FORMAT OF THE BILLS RECEIVABLE BOOK
WHAT ARE BILLS PAYABLE ?
A bill payable is a document which shows the amount owed for goods or services received on credit (meaning not paid at the time that the goods or services were received). It is a negotiable instrument which refers to the amount or debts the customer has to pay to the seller or the supplier on a later date.
BILLS PAYABLE REGISTER
Also known as a B/P book, bills payable book is a subsidiary or secondary book of accounting where all bills of exchange, which are payable by the business, are recorded. The total value of all the bills payable for an accounting period is transferred to the books of accounts.
In this book, the total of the amount column will be posted to the credit of the Bills Payable Account and the accounts of the parties who drew the bills (or at whose request the bills were accepted) will be debited .
FORMAT OF BILLS PAYABLE BOOK –
Thus, in simple words the Bills payable and Bills Receivable books are special journal books which are maintained to record the bills drawn and received in case the volume of bills drawn is large in an organization.