accounts payable and accounts receivable

What is the difference between accounts payable and accounts receivable?

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

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