accounts payable and accounts receivable

What is the difference between accounts payable and accounts receivable?

Solutions

Expert Solution

Accounts payable and accounts receivable are two important concepts in accounting that refer to different types of transactions.

Accounts payable (AP) refers to the money that a business owes to its suppliers or vendors for goods or services that have been purchased on credit. This means that the business has received the goods or services but has not yet paid for them. AP is considered a liability on the balance sheet of a company.

Accounts receivable (AR), on the other hand, refers to the money that a business is owed by its customers for goods or services that have been sold on credit. This means that the business has delivered the goods or services but has not yet received payment for them. AR is considered an asset on the balance sheet of a company.

In short, the main difference between accounts payable and accounts receivable is that AP is money that a business owes to others, while AR is money that is owed to the business.

devender singh answered 1 year ago

Next > < Previous

Related Solutions

cash collections of accounts receivable will increase and decrease _ 1) accounts payable , accounts...

cash collections of accounts receivable will increase ____ and decrease _____ 1) accounts payable , accounts receivable 2) accounts receivable, accounts payable 3) cash, accounts receivable 4) cast, accounts payable when developring cost functions , which of the following is false 1) the cost funtion must be believable 2) the cost function does not have to be reliable 3) personal observations of cost and activities provide the best evidence of a plausible relationship between a cost and its cost driver...

Cash $ 80 Accounts Payable $ 26 Accounts Receivable 12 Wages and Other Expenses Payable 111...

Cash $ 80 Accounts Payable $ 26 Accounts Receivable 12 Wages and Other Expenses Payable 111 Inventories 188 Long-Term Debt 203 Other Current Assets 26 Other Long-Term Liabilities 44 Property, Plant, and Equipment 355 Contributed Capital 356 Other Assets 99 Retained Earnings 20 Assume that the following events occurred in the quarter ended December 31 (amounts provided are in whole dollars): Paid $2,000,000 cash for an additional “other asset”. Issued additional shares for $2,000,000 in cash. Purchased property, plant, and...

REQUIRED: Prepare General Ledger, Accounts Receivable Ledger, Accounts Payable Ledger, Trial Balance, Schedule of Accounts Receivable...

REQUIRED: Prepare General Ledger, Accounts Receivable Ledger, Accounts Payable Ledger, Trial Balance, Schedule of Accounts Receivable and Schedule of Accounts Payable from the following information and Journals using T Accounts with a balance column. Grassley Company completes these transactions during November of the current year (terms for all its credits sales are 2/10, n/30). Nov.1 Purchased $5,058 of office equipment on credit from Brun supply, invoice dated November 1, terms n/10 EOM. 2 Borrowed $88, 500 cash from Wisconsin Bank...

An Accounts Payable of balance of $-70 got posted to Accounts Receivable in amount of $70...

An Accounts Payable of balance of $-70 got posted to Accounts Receivable in amount of $70 in error. To reverse this out, do we credit is the journal entry- Credit - AR 70 and Debit AP 70? The oringinal amount was -70 in AP but it was a positive 70 in AR.

Explain how the accounts receivable, inventory, power and equipment, accounts payable, wages payable and long-term debt...

Explain how the accounts receivable, inventory, power and equipment, accounts payable, wages payable and long-term debt impacted cash flow from one year to the next. 200-word minimum.

Presented below is a list of balance sheet accounts. Accounts payable Land (in use) Accounts receivable...

Presented below is a list of balance sheet accounts. Accounts payable Land (in use) Accounts receivable Long-term investments Accumulated depreciation—buildings Notes payable (due in 6 months) Accumulated depreciation—equipment Notes receivable (due in 2 years) Allowance for uncollectible accounts Patent Bonds payable (due in 10 years) Preferred stock Buildings Prepaid expenses Cash Rent payable (current) Common stock Restricted cash (to be used in 10 years) Copyright Retained earnings Equipment Short-term investments Interest receivable (due in three months) Taxes payable Inventories Wages...

A company has inventory balance of $24,318, accounts receivable of $9,637, and accounts payable of $14,365....

A company has inventory balance of $24,318, accounts receivable of $9,637, and accounts payable of $14,365. If the credit sales are $183,030 and cost of goods sold are $128,952, what is the company's cash (conversion) cycle in number of days? (Use ending balances and assume 365 days in a year.) A) 36.59 B) 37.61 C) 38.63 D) 39.64 E) 40.66

A company has inventory balance of $24,935, accounts receivable of $9,902, and accounts payable of $14,652....

A company has inventory balance of $24,935, accounts receivable of $9,902, and accounts payable of $14,652. If the credit sales are $186,978 and cost of goods sold are $132,477, what is the company's cash (conversion) cycle in number of days? (Use ending balances and assume 365 days in a year.)

Differentiate between accounts receivable and accounts payable and describe the impact both have on the financial...

Differentiate between accounts receivable and accounts payable and describe the impact both have on the financial management of IT teams or organizations.

BeachTime Company uses a perpetual inventory system and both an accounts receivable and an accounts payable...

BeachTime Company uses a perpetual inventory system and both an accounts receivable and an accounts payable subsidiary ledger. Balances related to both the general ledger and the subsidiary ledger for the company are indicated in the working papers. Below are a series of transactions for BeachTime Co. for the month of January. Credit sales terms are 2/10, n/30. The cost of all merchandise sold was 57% of the sales price. Jan.3 Sell merchandise on account to M. Knast $2,900, invoice...

Subjects