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Accounts Payable vs. Accounts Receivable At first glance, accounts payable and accounts receivable might seem similar. But it’s important not to confuse these two separate issues.
In simplistic terms, if Bob, Dave, and Roger owe the company money, the Accounts Receivable account will contain a separate account for Bob, and Dave and Roger. All 3 of these accounts would be added together and shown as a single number (i.e. total 'Accounts Receivable' – balance owed) on the balance sheet.
Accounts receivable represents money owed by entities to the firm on the sale of products or services on credit. In most business entities, accounts receivable is typically executed by generating an invoice and either mailing or electronically delivering it to the customer, who, in turn, must pay it within an established timeframe, called credit terms [citation needed] or payment terms.
Accounts payable personnel must watch for fraudulent invoices. In the absence of a purchase order system, the first line of defense is the approving manager. However, AP staff should become familiar with a few common problems, such as " Yellow Pages " ripoffs in which fraudulent operators offer to place an advertisement.
Assets and expenses are two accounting terms that new business owners often confuse. Here’s what each term means and how to use them in accounting. Assets vs. Expenses: Understanding the Difference
In bookkeeping, a general ledger is a bookkeeping ledger in which accounting data are posted from journals and aggregated from subledgers, such as accounts payable, accounts receivable, cash management, fixed assets, purchasing and projects. [1]
A fixed asset, often referred to as a tangible asset or property, plant, and equipment (PP&E), is a long-term asset that holds value over time and can be used to generate income.
The classification of accounts into real, personal and nominal is based on their nature i.e. physical asset, liability, juristic entity or financial transaction. The further classification of accounts is based on the periodicity of their inflows or outflows in the context of the fiscal year: Income is a short term inflow during the fiscal year.