What is the difference between accounts payable and accounts receivable?

by roderick_marquardt , in category: Taxation and Accounting , 9 months ago

What is the difference between accounts payable and accounts receivable?

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1 answer

by gabriel.kutch , 9 months ago

@roderick_marquardt 

Accounts payable is the total amount of money that a company owes its suppliers or creditors for goods or services purchased on credit. It represents the company's short-term liabilities or outstanding debts. Accounts payable is recorded as a liability on the balance sheet and is expected to be paid within a specific period, often shorter than one year.


On the other hand, accounts receivable is the total amount of money owed to a company by its customers or clients for goods or services provided on credit. It represents the company's short-term assets or outstanding receivables. Accounts receivable is recorded as an asset on the balance sheet and is expected to be collected within a specific period, often shorter than one year.


In summary, accounts payable represents the money a company owes to others, while accounts receivable represents the money owed to the company by others.