Bill Payable Account - Real Account

Real accounts are those accounts that represent tangible assets, properties, or financial transactions that have a physical existence. Bill Payable account is a real account that represents the liability of a person or a business towards the amount that is to be paid to the creditors for goods or services purchased on credit. It is a liability account and is represented on the balance sheet under the head 'Current Liabilities'.

Explanation:

A Bill Payable is a written promise to pay a certain amount of money to a creditor on a future date. When a business purchases goods or services on credit, it is recorded in the Bill Payable account. The amount is payable on a specific date in the future. When the payment is made, the Bill Payable account is credited, and the cash account is debited.

The Bill Payable account is a real account because it represents a tangible obligation of a business towards its creditors. The amount payable is a physical transaction, and it exists until it is paid off. The balance of the Bill Payable account reflects the total amount of money that a business owes to its creditors.

Conclusion:

In conclusion, the Bill Payable account is a real account that represents the liability of a business towards its creditors. It is an essential account that helps businesses keep track of their liabilities and manage their cash flows effectively.