It often happens that the drawee realizes that he is unable to make the entire bill payment at one time. During such situations, he makes a part payment of his bill of exchange instead of paying the entire amount. However, in accounting practice, this part payment is never treated as a mode of payment regarding a bill of exchange.
There are certain steps which are adopted for the accounting treatment of these part payments of a bill. These are as follows-
- Dishonouring a bill
- Either by drawing a fresh bill or receiving the total bill amount due
- Accepting this part payment
- Charging interest on the amount which is still due.
Links of Previous Main Topic:-
- Book keeping
- Meaning of gaap
- Origin of transaction
- The concept of debit and credit
- Subsidiary books or sub division of journal
- Balancing of ledger accounts
- Meaning of trial balance
- Balance sheet in final accounts without adjustments
- Adjustments additional information in preparation of final accounts
- Meaning of bank reconciliation statements
Links of Next Accounting Topics:-