Interested to Buy Any Domain ? << Click Here >> for more details...
Answer Posted / mohammed faheemuddin
Hi,
Bills of exchange may be defined as a commitment subscribed
by your customer to pay a certain amount on a given date
upon presentation of the bill of exchange. They can be used
to materialize installment payments.
For example, you have accepted that your customer pays the
invoice amount in 3 monthly installments of 1000 USD each.
You will issue 3 bills of exhange of 1000 usd each and
maturing in month in month m, m+1 and m+2. The bills of
exchange will be sent to your customer for
acceptance(customer signs them).
Once accepted they will be returned to you. You will have to
post accounting entries. But note that even though the
accepted bills of exchange can be considered as payment, you
cannot clear the outstanding customer invoice until the
bills are effectively paid at maturity date. You then have
to post the bills of exchange as a special GL transaction.
Again once you have received the bills of exchange you may
decide to discount them right away with your bank and this
is done with or without recourse. Depending on the option
choosen, accounting entries are different. by discounting
the bills you receive payment of the bill and this can be
used to clear the outstanding customer invoice.
But note that until the bill is finally paid by the customer
at maturity date you remain liable. You account for this
liability by making postings which will show the discounted
bills of exchange as a contingent liability. They do not
show in the balance sheet itself but appear in an appendix
of the balance sheet.
| Is This Answer Correct ? | 4 Yes | 1 No |
Post New Answer View All Answers
what is the deference between depreciation explanation
If a promoter has purchased an asset on behalf of the company before the incorporation of the same then what will be the accounting treatment to record the asset in the books of company
How to Automate requirment mapping in QC?
state (5) accounting concepts and give 1 example of each
Why in KE5Z report in SAP Accounting Data not found?
In the balance sheet, where do you show tds?
Pl's confirm me this entry how to pass in Tally 9.0 & Tally ERP.9 that if I purchase 20 mobile,30 phone,20 LCD,15 laptop from mangesh @ Rs.7000,Rs.200,Rs.17000 and Rs.14000 respectively on each. But I purchase by cash and 15 days later I sold half of the thing to priya margin of Rs.100 on each by cheque and rest i sold to minal on cash margin of Rs.200 on each. But I received cash 1 month later. so calculate how much profit I got by selling the products.
Do you know retail banking?
can we credit depreciation of the year to the general reserves in a balance sheet of that year? and also enlist some relevant documents or standards?
Do you know partitioning in accounting?
HOW WE MADE ENTRY OF SURCHARGE ON VAT PURCHASE IN PUNJAB
DIFFERNCE BETWEEN RESERVE AND FUND?
bank releted question interviw plz tel me
What is the journal entry of building rent and TDs payment?
Explain dual aspect term in accounting?
