Livestock Economics, Marketing and Business Management

BILLS RECEIVABLE AND BILLS PAYABLE

• For accounting purpose, bills of exchange and promissory notes are treated alike, i.e., similar.
• For the drawer or the payee, a bill of exchange duly accepted is known as a bill receivable (B/R).For the drawee, the same is known as bill payable(B/P).
• A bill receivable is an example of current asset for the business while a bill payable is a current liability.
• On the other hand, a promissory note is a bill receivable for the payee and a bill payable for the maker for the promisor.
• Thus, a bill is regarded as a bill receivable by one who is entitled to receive the sum of money due on it.
• It may have been drawn by him and accepted by his debtor, or it may be a bill which his debtor has endorsed over to him in lieu of payment of his debt.
• Similarly, a bill of exchange is treated as a bill payable by one who is liable to pay the amount on the due date.
• Thus, the same bill is a bill receivable to one party and a bill payable to the other.