Accommodation bills are generally for?
Correct answer: B. For mutual financial accommodation
- A. Genuine trade reasons
- B. For mutual financial accommodation
- C. To help augment money supply
- D. All the three
Explanation
An accommodation bill is drawn and accepted without a genuine sale or purchase, mainly to provide mutual financial help or credit to the parties. It is therefore different from a trade bill, which arises from an actual business transaction.
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About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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