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What is the accounting treatment of: liability created against bills receivable discounted. How will the above transaction affect bills receivable, debtors & how will it be shown in the balance sheet?
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What is the accounting treatment of: liability created against bills r...
The liability created against bills receivable discounted is treated as a current liability in the balance sheet of the company. This liability represents the amount of money that the company owes to the bank or financial institution that discounted its bills receivable.
The accounting treatment of this liability involves debiting the cash account and crediting the liability account. This will increase the liability balance in the balance sheet and reduce the cash balance.
As for the effect on bills receivable and debtors, the bills receivable will be reduced by the amount that has been discounted, while the debtors will remain unchanged. This is because bills receivable represent the amount of money that the company is owed by its customers, while debtors represent the customers who owe the company money. The liability created against bills receivable discounted does not affect the amount owed by the customers, but rather represents the amount owed by the company to the bank or financial institution.
The accounting treatment of this liability involves debiting the cash account and crediting the liability account. This will increase the liability balance in the balance sheet and reduce the cash balance.
As for the effect on bills receivable and debtors, the bills receivable will be reduced by the amount that has been discounted, while the debtors will remain unchanged. This is because bills receivable represent the amount of money that the company is owed by its customers, while debtors represent the customers who owe the company money. The liability created against bills receivable discounted does not affect the amount owed by the customers, but rather represents the amount owed by the company to the bank or financial institution.
Community Answer
What is the accounting treatment of: liability created against bills r...
It is shown in assets side of balance sheet
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What is the accounting treatment of: liability created against bills receivable discounted. How will the above transaction affect bills receivable, debtors & how will it be shown in the balance sheet?
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What is the accounting treatment of: liability created against bills receivable discounted. How will the above transaction affect bills receivable, debtors & how will it be shown in the balance sheet? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about What is the accounting treatment of: liability created against bills receivable discounted. How will the above transaction affect bills receivable, debtors & how will it be shown in the balance sheet? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What is the accounting treatment of: liability created against bills receivable discounted. How will the above transaction affect bills receivable, debtors & how will it be shown in the balance sheet?.
What is the accounting treatment of: liability created against bills receivable discounted. How will the above transaction affect bills receivable, debtors & how will it be shown in the balance sheet? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about What is the accounting treatment of: liability created against bills receivable discounted. How will the above transaction affect bills receivable, debtors & how will it be shown in the balance sheet? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What is the accounting treatment of: liability created against bills receivable discounted. How will the above transaction affect bills receivable, debtors & how will it be shown in the balance sheet?.
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