Bills are recorded separately sot as to avoid confusion during stock taking and checking and auditing procedures for the company, bills receivable is where the stock cross products sold to a particular customer is recorded, bills payable is where the stock purchased are recorded, bills receivable are debited while bills payable is credited.

Bills Payable account usually has a credit balance as it is to be paid on maturity and acts as liability for the business. However, because Bills Receivable represents amount to be received by the business, it acts as an asset for the business, thus, usually carries a debit balance. For example:

1. Drew on Mr. X, debtor (Bill No. 123) at two months after date for Rs.4,000- It will be recorded in Bills Receivable Account as amount is to be received by business.
2. Accepted Mr. PQR, creditor's draft for Rs.10,400- This would be recorded in Bills Payable Account as amount is payable by the business.