Accommodation Bills – Helping a Friend! 🤝
Scenario:
- Ram needs money. Shyam also needs money.
- They don't buy/sell any goods.
- Ram draws a dummy bill on Shyam. Shyam accepts it.
- Ram discounts it with the Bank and gets cash.
- Ram shares the cash with Shyam.
- On due date, they both contribute and pay the Bank.
Definition: A bill drawn and accepted without any consideration (no goods sold), just to help one or both parties raise funds temporarily. Also known as "Kite Flying".
Key Features 🌟
- No Trade: No Purchase/Sale entry.
- Mutual Help: Done to accommodate financial needs.
- Sharing: Proceeds and Discount charges are shared in an agreed ratio.
- Bad Debt Risk: If one party fails to pay their share on due date, the other party is in big trouble!
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Quiz Time! 🎯
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💡 Final Wisdom: "Accommodation Bills are risky. If your friend runs away with the cash, you are left holding the bag (and the liability)!" 🏃♂️💨
Next up: Practical Problems - Let's solve a full sum! 🧮