ACCOUNTS RECEIVABLE VS ACCOUNTS PAYABLE

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Account receivable is the total amount owed to a business by its customers. Account payable, on the other hand, is the total amount that a business owes to its suppliers and other creditors.

Account receivable is the total of a company's trade receivables, bill receivables, and other receivables.

Trade receivables are the monies owed to a firm by its customers as a result of the sale of goods or the provision of services.

Trade receivable usually results from the normal line of goods and services of a business. In other words, it occurs only when a company sells items or provides services on credit.

Bill receivables are bills of exchange for which a business expects to be paid in the future.

Account payable, on the other hand, is the total of all trade payables, bill payables, and other business payables.

Trade payables are the amount due to the suppliers of a business as a result of procuring raw materials for its normal line of business.

Bill payables are the bills of exchange that have been received but not yet paid by a company

Differences Between Accounts Receivable And Account Payable

1. Account receivable is the amount owed to a business by its customers while account payable is the amount a business owes to its suppliers

2. Account receivable refers to money that needs to be collected, whereas account payable refers to money that needs to be paid.

3. In the balance sheet, account receivable is a current asset. Account payable, on the other hand, is a current liability on the balance sheet.

4. Account payable includes trade payables, bills payables, and other payables, whereas account receivable include trade receivables, bills receivables, and other receivables.

5. Account payable results in cash outflow from the organization, but account receivable results in cash inflow.

Accounts receivable and payable are linked in general. For example, suppose James purchases $100 worth of items from John on credit. In James' account, this will be entered as an account payable.

If we are to record this transaction in John's account, however, it will be considered an account receivable. So, depending on whose entity we're looking at it from, account receivable and account payable as a single transaction could mean two distinct things.

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