Dictionary / Below Par
What does Below Par mean in accounting?
Quick definition
GeneralAt a discount; less than face value. This term guides how bookkeepers record, classify, and explain related transactions in routine financial reporting.
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Examples
A Treasury bill bought under face
You run a fabrication shop. On January 16 you park idle cash by buying a 26-week Treasury bill with a $20,000 face amount from a broker for $19,400. The bill is below par: you paid less than the printed face. Record the investment at $19,400 in QuickBooks Online or Xero, not $20,000, and put the face in the memo. When $20,000 later hits the bank feed, the extra $600 is the discount you earned, not a customer deposit.
A supplier markdown is not this
On October 4 your tile shop receives a $2,250 invoice from a clay supplier for a porcelain pallet. The supplier knocks 10% off as a volume trade discount, so you enter a bill for $2,025 to inventory. That $225 markdown is not below par. The invoice has no par value or face, so do not create an investment or bond discount account for a supplier bill.
Why it matters
Below par means a note, bond, or share changed hands for less than its printed face amount or par value. You will not post this most months; it shows up when you buy or issue a security at a discount, not at every close. Record the holding at what you paid: post it at face and checking will not match the bank, and the discount will miss the periods it belongs in. A trade discount or cash discount on a vendor bill is not this, because those invoices have no par.
Further reading
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What is Below Par in bookkeeping?
At a discount; less than face value.
When should I use Below Par?
Use Below Par when the transaction facts match its definition and you need the ledger and financial statements to reflect the correct account and period.
What is a common mistake with Below Par?
Below Par is used for below par entries, while Bad Debt covers a related but distinct bookkeeping purpose. Review both terms before posting unusual transactions. A common mistake is applying it by label only instead of checking the underlying transaction details.