Specimen of Bill of Exchange Important points of Bill of Exchange: Date: When a bill of exchange is drawn, the drawer has to specify the date in the top right corner. The date is important for the purpose of calculating the due date of the bill. Generally, the drawee is given three days as a grace pRead more
Specimen of Bill of Exchange
Important points of Bill of Exchange:
Date: When a bill of exchange is drawn, the drawer has to specify the date in the top right corner. The date is important for the purpose of calculating the due date of the bill. Generally, the drawee is given three days as a grace period over and above the due date of maturity.
In the above specimen, the date mentioned is 25th July 2021, so the due date will be three months + 3 days( grace period) i.e. to say 28th October 2021.
Term: In the above, the term as agreed by the drawer and drawee is 3 months. So the maturity date will be after 3 months.
Stamp: The Stamp is affixed in the left corner in every bill of exchange, the value of which depends upon the amount specified in the bill.
Parties involved in Bill of Exchange:
Drawer: The one who makes the bill, i.e. the creditor.
Drawee: The one on whom the bill is drawn, i.e. the debtor.
Payee: The one to whom the amount is to be paid is the payee.
Sometimes, the drawer and the payee are the same people.
For Example,
i) A bill of exchange for Rs 10,000 is drawn by Sandy on Karan which is due after three months. Karan accepted the bill which is met at maturity and hence becomes the acceptor of the bill by putting his signature.
Here, Sandy is the drawer and Karan is the drawee. As the payment on maturity is received by Sandy so the payee will be Sandy.
ii) A bill of exchange for Rs 10,000 is drawn by Sandy on Karan which is due after three months. Karan accepted the bill. Thereafter Sandy endorsed the bill in favor of his creditor, Vikash. The bill is met at maturity.
So in this case, Sandy is the drawer, Karan is the drawee and Vikash is the payee as he received the amount at maturity.
Acceptance: Acceptance by the drawee is given on the face of the bill as-
Meaning of BOE:
In a business, in the case of credit sales, the payment is received after a certain period of time. In such a case the seller i.e. the creditor makes a credit note and the purchaser i.e. the debtor accepts the same by giving his acceptance by signing the instrument, to pay the amount of money mentioned to a certain person or the bearer of the instrument.
It is generally a negotiable instrument i.e. can be transferred from one person to another.
Features ofBill of Exchange.
It is a written document.
It is an unconditional order to pay.
It must be signed by the maker of the bill i.e. the drawer.
It must be properly stamped.
The amount is payable either to a specified person or to his order or to the bearer.
It contains an order to pay the amount mentioned in the instrument both in figures and words.
The amount is to be paid either on the expiry of a fixed period from the date of the bill or on-demand.
To begin with, let me give you a brief explanation of both the terms i.e. Accounting policies and accounting principles- In order to maintain the financial statements, the company’s management adopts various Accounting Policies of its own. This generally includes the rules, the directions as to howRead more
To begin with, let me give you a brief explanation of both the terms i.e. Accounting policies and accounting principles-
In order to maintain the financial statements, the company’s management adopts various AccountingPolicies of its own. This generally includes the rules, the directions as to how the financial statements will be prepared or how the valuation of depreciation would be done, and so on. These are flexible in nature and vary from company to company.
For Example 1, Johnson Co. uses FIFO (first in first out) method to value the inventory. That is to say that, while selling its product, it sells those goods or products which it has acquired or produced first.
It does not consider the LIFO or weighted average cost. The other company may adopt the other method as per its wish.
Example 2, Johnson Co. uses the straight-line method of depreciating an asset, whereas the other company can opt for a written down value method depending upon the need of the company.
So what I am trying to explain from this is that the accounting policies are flexible and can be adopted as per the needs of the company.
Accounting Principles are the rules which the accountants adopt universally for recording and reporting the financial data. It brings uniformity in accounting throughout the practice of accounting. These are generally less flexible in nature.
For Example, “Cost” is a principle. According to this accounting principle, an asset is recorded in the books at the price paid to acquire it and this cost will be the basis for all the subsequent accounting for the asset. However, asset market value may change over time, but for the accounting purpose, it continues to be shown at its book value i.e. at which it is acquired.
Some more examples would be of Matching principle, Consistency principle, Money measurement principle, etc.
Differences
Conclusion
The point is Accounting Principles are the broad direction to reach a goal and to reach that goal helps the accounting policies.
To start with let me give you a brief explanation of what a subscription is After joining a not-for-profit organization, a member is required to pay a certain amount of money every year at periodical intervals in order to keep his membership activated, such an amount of money is the subscription. FoRead more
To start with let me give you a brief explanation of what a subscription is
After joining a not-for-profit organization, a member is required to pay a certain amount of money every year at periodical intervals in order to keep his membership activated, such an amount of money is the subscription.
For accounting purposes, subscription is always taken on an accrual basis which means the amount which is received during the current year is only taken into consideration.
Now, Subscription received in advance means the amount of money that has been received during the current year but which relates to the year that is yet to come. In other words, we can say it is the unearned income by the organization.
It is recurring in nature and liability for the organization as it does not relate to the current year.
Journal Entry for Subscription received in advance
Here, the Subscription received in advance is credited to the Subscription account for the current year.
This is the adjustment entry made during the current year.
Treatment of Subscription in Financial Statements
Receipts and payment account.
Income and expenditure account.
Balance sheet.
Receipts and Payment account: In the receipts and payment account, the entire amount of subscription is written on the receipts side. That is to say, subscription amount relating to the previous year, current year, and the year to come (outstanding subscription, current year subscription, advance subscription).
Income and Expenditure account: In the Income and Expenditure Account, the subscription comes on the Income side. It is shown as
Here, a subscription received in advance in the current year is deducted to find the actual amount because although the money is received in advance the benefits related to it are yet to be provided by the organization.
Balance sheet: In the balance sheet, a subscription received in advance comes in the liability side under current liabilities as the benefits related to it are yet to be derived.
For Example, Lionel club received subscription from its members for the year 2020 as follows-
Subscription of 2020 was received in 2019 – 2,000
Subscription of 2021 was received in 2020 – 3,000
The total subscription was received during the year – 10,000
Here,
Subscription of 2020 was received in 2019- It is an Outstanding Subscription.
Subscription of 2021 was received in 2020- It is an advance Subscription.
Bill of exchange format 12th commerce?
Specimen of Bill of Exchange Important points of Bill of Exchange: Date: When a bill of exchange is drawn, the drawer has to specify the date in the top right corner. The date is important for the purpose of calculating the due date of the bill. Generally, the drawee is given three days as a grace pRead more
Specimen of Bill of Exchange
Important points of Bill of Exchange:
Date: When a bill of exchange is drawn, the drawer has to specify the date in the top right corner. The date is important for the purpose of calculating the due date of the bill. Generally, the drawee is given three days as a grace period over and above the due date of maturity.
In the above specimen, the date mentioned is 25th July 2021, so the due date will be three months + 3 days( grace period) i.e. to say 28th October 2021.
Term: In the above, the term as agreed by the drawer and drawee is 3 months. So the maturity date will be after 3 months.
Stamp: The Stamp is affixed in the left corner in every bill of exchange, the value of which depends upon the amount specified in the bill.
Parties involved in Bill of Exchange:
Sometimes, the drawer and the payee are the same people.
For Example,
i) A bill of exchange for Rs 10,000 is drawn by Sandy on Karan which is due after three months. Karan accepted the bill which is met at maturity and hence becomes the acceptor of the bill by putting his signature.
Here, Sandy is the drawer and Karan is the drawee. As the payment on maturity is received by Sandy so the payee will be Sandy.
ii) A bill of exchange for Rs 10,000 is drawn by Sandy on Karan which is due after three months. Karan accepted the bill. Thereafter Sandy endorsed the bill in favor of his creditor, Vikash. The bill is met at maturity.
So in this case, Sandy is the drawer, Karan is the drawee and Vikash is the payee as he received the amount at maturity.
Acceptance: Acceptance by the drawee is given on the face of the bill as-
Meaning of BOE:
In a business, in the case of credit sales, the payment is received after a certain period of time. In such a case the seller i.e. the creditor makes a credit note and the purchaser i.e. the debtor accepts the same by giving his acceptance by signing the instrument, to pay the amount of money mentioned to a certain person or the bearer of the instrument.
It is generally a negotiable instrument i.e. can be transferred from one person to another.
Features of Bill of Exchange.
See lessWhat is the difference between accounting policies and principles?
To begin with, let me give you a brief explanation of both the terms i.e. Accounting policies and accounting principles- In order to maintain the financial statements, the company’s management adopts various Accounting Policies of its own. This generally includes the rules, the directions as to howRead more
To begin with, let me give you a brief explanation of both the terms i.e. Accounting policies and accounting principles-
In order to maintain the financial statements, the company’s management adopts various Accounting Policies of its own. This generally includes the rules, the directions as to how the financial statements will be prepared or how the valuation of depreciation would be done, and so on. These are flexible in nature and vary from company to company.
For Example 1, Johnson Co. uses FIFO (first in first out) method to value the inventory. That is to say that, while selling its product, it sells those goods or products which it has acquired or produced first.
It does not consider the LIFO or weighted average cost. The other company may adopt the other method as per its wish.
Example 2, Johnson Co. uses the straight-line method of depreciating an asset, whereas the other company can opt for a written down value method depending upon the need of the company.
So what I am trying to explain from this is that the accounting policies are flexible and can be adopted as per the needs of the company.
Accounting Principles are the rules which the accountants adopt universally for recording and reporting the financial data. It brings uniformity in accounting throughout the practice of accounting. These are generally less flexible in nature.
For Example, “Cost” is a principle. According to this accounting principle, an asset is recorded in the books at the price paid to acquire it and this cost will be the basis for all the subsequent accounting for the asset. However, asset market value may change over time, but for the accounting purpose, it continues to be shown at its book value i.e. at which it is acquired.
Some more examples would be of Matching principle, Consistency principle, Money measurement principle, etc.
Differences
Conclusion
The point is Accounting Principles are the broad direction to reach a goal and to reach that goal helps the accounting policies.
See lessCan you explain subscription received in advance with journal entry?
To start with let me give you a brief explanation of what a subscription is After joining a not-for-profit organization, a member is required to pay a certain amount of money every year at periodical intervals in order to keep his membership activated, such an amount of money is the subscription. FoRead more
To start with let me give you a brief explanation of what a subscription is
After joining a not-for-profit organization, a member is required to pay a certain amount of money every year at periodical intervals in order to keep his membership activated, such an amount of money is the subscription.
For accounting purposes, subscription is always taken on an accrual basis which means the amount which is received during the current year is only taken into consideration.
Now, Subscription received in advance means the amount of money that has been received during the current year but which relates to the year that is yet to come. In other words, we can say it is the unearned income by the organization.
It is recurring in nature and liability for the organization as it does not relate to the current year.
Journal Entry for Subscription received in advance
Here, the Subscription received in advance is credited to the Subscription account for the current year.
This is the adjustment entry made during the current year.
Treatment of Subscription in Financial Statements
Receipts and Payment account: In the receipts and payment account, the entire amount of subscription is written on the receipts side. That is to say, subscription amount relating to the previous year, current year, and the year to come (outstanding subscription, current year subscription, advance subscription).
Income and Expenditure account: In the Income and Expenditure Account, the subscription comes on the Income side. It is shown as
Here, a subscription received in advance in the current year is deducted to find the actual amount because although the money is received in advance the benefits related to it are yet to be provided by the organization.
Balance sheet: In the balance sheet, a subscription received in advance comes in the liability side under current liabilities as the benefits related to it are yet to be derived.
For Example, Lionel club received subscription from its members for the year 2020 as follows-
The total subscription was received during the year – 10,000
Here,
Subscription of 2020 was received in 2019- It is an Outstanding Subscription.
Subscription of 2021 was received in 2020- It is an advance Subscription.
See less