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Answer -
In day to day operations, a business receives many bills. Maintaining a journal for all such bills is a cumbersome task. In this case, a specialized book is created which keeps record of all such bills that are received from the debtors. This book contains all the necessary information such as bill date, due date, amount, debtors name and it is summed up on a periodical basis and the balance thus obtained is transferred to debit side of the bills receivable account.
Maintaining a bills receivable book has following benefits:
1. All information pertaining to the bills receivable, such as due date, amount, etc., get recorded in one place, thereby makes it easy to access the records.
2. Likelihood of fraud is greatly minimized as bills are recorded in one place.
3. Higher level of liability and obligation exists on the person maintaining the accounts. If any error is spotted, it can be rectified easily.
4. Time of the accountant is saved as recording of transactions are recurring and similar in nature.
5. As it is a particular book only dealing with bills receivable, it is easy to locate all details pertaining to a specific bill of exchange.