Accommodation bill is a bill drawn or accepted for accommodation purposes without underlying commercial transaction. One party (accommodator) draws or accepts a bill to help another party (accommodated) obtain credit or funds. The accommodator gains no direct benefit and provides help purely to assist the accommodated party. Common example: Drawer's creditor draws bill on the drawer's acceptor who accepts purely to help, without goods or services being provided. Accommodation transactions are valid under law but must be transparent. Accounting treatment depends on perspective: From accommodator's perspective: Bills Receivable is shown when bill is held; it represents contingent liability if endorsed. From accommodated party's perspective: Bill is recorded as liability with notation about accommodation nature. Accommodation bills create contingent liabilities for parties involved. If primary party defaults, accommodator becomes liable. Documentation is critical: Note clearly that bill is for accommodation; record the understanding with accommodated party. These bills are risky for acceptors who become primarily liable despite not being in transaction. Banks are cautious with accommodation bills and may require additional security. Exam tip: Understand the nature of accommodation bills and the contingent liability they create; practice distinguishing accommodation bills from regular trade bills; know the accounting implications.