Difference Between Debtors and Bills Receivable
| Point of Difference | Debtors | Bills Receivable |
|---|---|---|
| Definition | Persons or entities who owe money to the business from credit sales. | Written promises (bills) received from customers agreeing to pay at a future date. |
| Nature | Oral or informal credit | Formal, legally enforceable instrument |
| Legal Value | No legal documentation | Has legal validity and enforceability |
| Balance Sheet Head | Current Assets - Trade Receivables | Current Assets - Bills Receivable |
| Example | Mr. A buys goods worth Rs. 10,000 on credit | Mr. A accepts a bill for Rs. 10,000 due in 60 days |
Difference Between Creditors and Bills Payable
| Point of Difference | Creditors | Bills Payable |
|---|---|---|
| Definition | Persons or entities to whom the business owes money for credit purchases. | Written promises (bills) the business has accepted to pay in the future. |
| Nature | Oral or informal liability | Formal, legally binding liability |
| Legal Value | No formal documentation | Legally enforceable document |
| Balance Sheet Head | Current Liabilities - Trade Payables | Current Liabilities - Bills Payable |
| Example | Company buys materials from XYZ & Co. worth Rs. 20,000 on credit | Company accepts a bill drawn by XYZ & Co. for Rs. 20,000 due in 90 days |
Image of a Bill of Exchange
