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Bill discounted is shown in which head of balance sheet?
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Bill discounted is shown in which head of balance sheet?
**Bill discounted is shown in which head of balance sheet?**

Bill discounted is shown under the head of "Current Liabilities" in the balance sheet.

**Explanation:**

The balance sheet is a financial statement that provides a snapshot of a company's financial position at a specific point in time. It consists of three main sections: assets, liabilities, and equity. The liabilities section represents the company's obligations or debts, which include both current and long-term liabilities.

Bill discounting is a common financing activity used by businesses to meet their short-term working capital requirements. It involves a company getting immediate cash by selling its bills or receivables to a bank or financial institution before their due date. In return, the company pays a certain discount or interest to the bank.

Here is a detailed explanation of why bill discounted is shown under the head of "Current Liabilities" in the balance sheet:

1. **Nature of Bill Discounting**: Bill discounting is a short-term financing arrangement where the company receives immediate cash against its bills or receivables. Since the transaction is short-term in nature, the liability arising from the bill discounting is considered a current liability.

2. **Current Liabilities Definition**: Current liabilities are obligations that are expected to be settled within the normal operating cycle of a business, usually within one year. These liabilities need to be paid off using current assets or through the creation of new current liabilities.

3. **Classification of Bill Discounting**: As bill discounting is a short-term financing arrangement, it falls under the category of current liabilities in the balance sheet. It represents the amount owed by the company to the bank or financial institution for the bills that have been discounted.

4. **Position in the Balance Sheet**: In the balance sheet, bill discounting is typically shown under the "Current Liabilities" section, which also includes other short-term obligations such as accounts payable, accrued expenses, short-term loans, and overdrafts. This section helps stakeholders understand the company's short-term financial obligations and liquidity position.

5. **Disclosure in the Notes**: It is important to note that while the bill discounted amount is shown under current liabilities, additional disclosure may be required in the notes to the financial statements. This disclosure may include details about the terms of the bill discounting arrangement, interest rates, maturity dates, and any associated risks.

In conclusion, bill discounted is shown under the head of "Current Liabilities" in the balance sheet due to its short-term nature and the obligation to repay the discounted amount within the normal operating cycle of the business.
Community Answer
Bill discounted is shown in which head of balance sheet?
Bill discounted is not shown in Balance sheet since an equal amount of credit has been given to Bills receivable account and and bank account has been debited, hence it won't appear in the balance sheet
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Bill discounted is shown in which head of balance sheet?
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