What is the effect of "Creditors accepted a bill for Rs. 3000" in accounting equation?
Yash and Hari!!
Accepting a bill by creditors means the business is giving one of its bills receivable to the creditor so that the due amount payable to the creditor is directly paid by one of its (firm's) debtors.
The treatment in accounting equation will be as follows:
1. Bills Receivable will be reduced by Rs 3,000 - Assets side
2. Creditors will be reduced by Rs 3,000 - Liabilities side
Journal entry will be:
Creditors A/c Dr.
To Bills Receivable A/c
(Creditors accepted a bill)
Accepting a bill by creditors means the business is giving one of its bills receivable to the creditor so that the due amount payable to the creditor is directly paid by one of its (firm's) debtors.
The treatment in accounting equation will be as follows:
1. Bills Receivable will be reduced by Rs 3,000 - Assets side
2. Creditors will be reduced by Rs 3,000 - Liabilities side
Journal entry will be:
Creditors A/c Dr.
To Bills Receivable A/c
(Creditors accepted a bill)