Question

Briefly explain the benefits of maintaining a Bills Payable Book and state how is its posting is done in the ledger?

Answer 1

A Bills Payable Book is a special purpose book, maintained to keep records of acceptance of bills, given to the creditors.

It contains details of the amount, date of bill, due date, to whom acceptance is given, etc., for future references.

It is totalled periodically and its balance is transferred to the credit side of the bills payable account.

Benefits of Maintaining Bills Payable Book

1. Availability of information: All the information related to the bills payable are recorded at one place, such as the amount, due date, etc.

2. Possibility of fraud: Since all the bills are recorded at one place, possibility of fraud is minimized.

3. Responsibility: All the transactions are recorded by the same person.

Therefore, errors can be easily detected and rectified.

This leads to a higher degree of responsibility and accountability of the accountant.