Accommodation of Bills

                       Accommodation of Bills

Bills of exchange are usually drawn to facilitate trade transaction, finance actual purchase and sale of goods. But apart from, financing transaction in goods, bills may also be used for raising fund temporarily.

Suppose, A needs finance to the extent of Rs. 10000/- for 3 months. In this case he may induce his friend B to accept a Bill of Exchange drawn on him for Rs. 10000/- for 3 months. A can then get the bill discounted with his bank paying a small sum of discount. Thus he can use the funds for 3 months and just before maturity, he will remit the amount to B to whom the bill will be presented by the bank for payment.

If both A and B need money, the same device can be used. Either A accepts a bill of exchange or B does. In either case the bill will be discounted with the bank and proceeds divided between the two parties according to mutual agreement. The discounting charges must also be borne by two parties in the same ratio in which the proceeds are divided on the due date the acceptor will receive from the other party his share. The bill will then be met. When bills are used for such purpose, they are known as accommodation bills.
ð In case of accommodation of bills, all the journal entries are passed in the books of two parties as same in the ordinary bills.
ð The only additional entries to be passed are for sending the remittance to the other parties and also debiting the other parties with the requisite amount of discount.

Bankruptcy: Bankruptcy/Insolvency of a person means person who has accepted the bill is unable to pay his liabilities and 

v  When it is known, the acceptor of the bill has become insolvent; entry for dishonour of  his acceptance must be passed.

v   When and if an amount is received, cash account will be debited and personal account of debtor will be credited.

v   The remaining amount will be irrecoverable and should be written off as bad debt.

Join COC Education, We provided best video classes for CA/CMA/CS/Class 11th & 12th/ B.com/M.com

Contact us on- 9999631597, 8448322142, 7303445575

Visit YouTube Channel  CA/CMA SANTOSH KUMAR

Click Now for Demo Video  www.coceducationDEMOLECTURE.com

Join WhatsApp group for your domain course  whatsapp.coceducation.com

 

ENROLLED WITH US TODAY AND ENLIGHTEN YOUR CAREER!!!

 

Related Courses

Related Courses Latest Blogs

Where To Get Best CMA Online Classes In India

COC Education is India's Best Institute To Get CMA Classes.


Who is The Best Faculty For Accounts?

You need the Best Faculty For Accounts, CA Exam Preparation, so that you can pass your exam with Flying Colors without wasting a single minute of your Precious Time. A Good Faculty will not only help you clear your exam but also help you achieve the highest rank Possible, which proves to be surely a great advantage in Job Placement after completing CA.


Best Video Lectures for Operations Management & Strategic Management (OMSM) CMA Inter Group-2

OMSM Operations Management and Strategic Management. Get your Video Lectures Operations Management and Strategic Management from COC Education


Top Reviews

Introduction to Statistics for CA Foundation

Introduction to Statistics for CA Foundation Business Mathematics, Logical Reasoning and Statistics is designed as per latest CA Foundation syllabus for Paper 3 to provide a firm grounding in the principles, techniques and practice. The book adopts self-study approach and has been written in student-friendly manner. With a blend of conceptual learning and problem-solving approach, it offers in-depth understanding of the basic mathematical and statistical tools. #introductiontostatistics


Chapter X of Companies Act 2013

Chapter X of Companies Act 2013 The company shall place the matter relating to such appointment for ratification by members at every annual general meeting. ... Under the Act, the provisions for rotation of auditors in the listed Company & certain other class of Companies, have been provided for. #chapterxofcompaniesact2013


Relevant sections under the Companies Act, 2013 dealing with fraud and false statements

Relevant sections under the Companies Act, 2013 dealing with fraud and false statements The new parent corporate law “The Companies Act 2013” is mostly ... I am limiting my write-up to the provisions to the Act, and I request the readers to refer relevant rules, if any, before ... in the 2013 Act is the Section 447 dealing with “Punishment for fraud”. ... Section 448


What is Corporate Image

What is Corporate Image A corporate identity or corporate image is the manner in which a corporation, firm or business enterprise presents itself to the public. The corporate identity is typically visualized by branding and with the use of trademarks, but it can also include things like product design, advertising, public relations etc #WhatisCorporateImage


What is Energy Audit

What is Energy Audit An energy audit is an inspection survey and an analysis of energy flows for energy conservation in a building. It may include a process or system to reduce the amount of energy input into the system without negatively affecting the output. #whatisenergyaudit