What is the difference between bills receivables and debtors

X accepts the bill and returns the same to Stephen Inc. The possible journal entries in the books of Stephen Inc. X for balance due. The above entry would convert an account receivable into a bill receivable. In general ledger , it would reduce the balance of accounts receivable account and increase the balance of bills receivable account.

Both are asset accounts. X; his balance retransferred to accounts receivable. Accounts receivable represent the balance that is due to a business from its credit customers. Accounts receivable typically arise on sale of any product or service. When a customer purchases and receives goods, the seller raises an invoice on the customer for the amount due. On the basis of this invoice, an account receivable is created in the books. A credit period is typically offered within which the customer is required to settle their outstanding balance.

To encourage a prompt settlement, a seller may offer a cash discount to the buyer at a certain rate if he settles the dues within a specified time. Such arrangement is made through establishing a payment term between seller and buyer e. Accounts receivable are reflected as current asset in the balance sheet of the seller because the payment settlement from them is mostly expected within a year period or accounting cycle.

These daybooks can be used to track down outstanding bills and determine the reasons for non-payment. As a result of the preceding discussion, every coin has two sides in the same way: bills receivable and bills payable. If there are bills receivable for one company, there will almost certainly be bills payable for another.

For effective working capital management, full control over bills receivable and bills payable should be in place. Skip to content. Sundry debtor is a collective account of differen debtors Bill receivables can be endorsed but sundry debtors cannot be endorsed. When the debtor give bills in regards of the payment of the credit goods purchased we open the bills receivable accounts and if the bill is not matured on the due-date or dishonoured we again transfer the bills receivable in the debtors account.

Thanks for ask asking. The difference: Bills are easily transferable: instead of waiting 30 days for your cash, you can transfer the bill to a bank process called bill discounting , who will give you cash and the bank will collect the money from the debtor on the due date.

Bills can be endorsed: say you have creditors whom you have to pay off, but do not have cash at the moment. You can endorse pass on these bills receivable to your creditors in settlement if your debt.

A debtor is a person or group of persons or an entity. A bill is a document or a note. A debtor becomes bills receivables when you draw a bill on him which says you owe him Rs xx and he accepts it. A bill receivable becomes a debtor when the bill is dishonoured, ie the debtor fails to pay the said amount on the due date of the bill.