Session Plan : Preparation of BP account

1️⃣ 0–5 min: Introduce the concept of Bills Payable and its role in accounting & conversion method.
2️⃣ 5–15 min: Explain the BP Account format, debit/credit rules, and purposes.
3️⃣ 15–30 min: Demonstrate entries inside BP A/c with examples (issue, payment, dishonour).
4️⃣ 30–40 min: Solve one numerical problem (find missing BP amount).
5️⃣ 40–45 min: Recap key points and present 5 important exam questions.

Lecture Material : (PDF, PPT)

Learning Material (IV Quadrant Approach)

(Q1) : Text and Image based Content (PDF/Image Formats)

The Bills Payable (BP) Account is a crucial component when converting from a Single Entry System (SES) to a Double Entry System (DES) using the Conversion Method. This account helps in determining the total amount of credit purchases and outstanding liabilities at the end of the accounting period.

🧾 Steps to Prepare the Bills Payable (BP) Account

1. Identify Opening Balance: Determine the opening balance of bills payable at the beginning of the period. This information can be obtained from the previous period's records or estimated based on available data.

2. Record Bills Accepted: Include all bills accepted during the current period. These are amounts the business has agreed to pay in the future.

3. Account for Bills Paid: Subtract the total amount of bills paid during the period. This reduces the outstanding liability.

4. Adjust for Dishonoured Bills: If any bills were dishonoured (i.e., not paid when due), add them back to the bills payable account.

5. Calculate Closing Balance: The closing balance is determined by the formula:

Closing BP = Opening BP + Bills Accepted – Bills Paid + Dishonoured Bills

📊 Example

Let's consider an example to illustrate the preparation of the Bills Payable Account:

• Opening BP: ₹10,000

• Bills Accepted: ₹50,000

• Bills Paid: ₹40,000

• Dishonoured Bills: ₹5,000

Bills Payable Account:

Particulars Debit (₹) Credit (₹)

To Balance b/d 10,000

To Bills Accepted 50,000

By Bills Paid 40,000

By Dishonoured Bills5,000

By Balance c/d 25,000

Closing BP: ₹25,000

✅ Significance of the Bills Payable Account

• Determines Credit Purchases: Helps in calculating the total credit purchases during the period.

• Assists in Preparing Financial Statements: Provides necessary information for preparing the Trading and Profit & Loss Account, and the Balance Sheet.

• Enhances Financial Analysis: Facilitates better understanding of the business's liabilities, aiding in liquidity and solvency analysis.

(Q2) : Video Based Content (Youtube)

(Q3) : Formative Assessment (Google Form/Any Other Online Quiz Platform)