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  • What's The Difference Between Accounts Receivable and Accounts Payable?

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    Marlyn Lotivio
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    Accounts receivable represent money owed to a business by its customers and are considered an asset on the business's balance sheet. Accounts payable represent money a business owes to other companies and are a liability. The example describes a logo designer invoicing a furniture company, with the designer recording an account receivable and the furniture company recording an account payable, as the money owed represents a future asset and liability respectively. While accounts receivable are an asset and not revenue, revenue can be recorded at the same time as an account receivable under accrual accounting.

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    Accounts receivable represent money owed to a business by its customers and are considered an asset on the business's balance sheet. Accounts payable represent money a business owes to other companies and are a liability. The example describes a logo designer invoicing a furniture company, with the designer recording an account receivable and the furniture company recording an account payable, as the money owed represents a future asset and liability respectively. While accounts receivable are an asset and not revenue, revenue can be recorded at the same time as an account receivable under accrual accounting.

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    34 views1 page

    What's The Difference Between Accounts Receivable and Accounts Payable?

    Uploaded by

    Marlyn Lotivio
    Accounts receivable represent money owed to a business by its customers and are considered an asset on the business's balance sheet. Accounts payable represent money a business owes to other companies and are a liability. The example describes a logo designer invoicing a furniture company, with the designer recording an account receivable and the furniture company recording an account payable, as the money owed represents a future asset and liability respectively. While accounts receivable are an asset and not revenue, revenue can be recorded at the same time as an account receivable under accrual accounting.

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    © All Rights Reserved
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    What’s the difference between accounts

    receivable and accounts payable?


    Accounts receivable are an asset account, representing money that
    your customers owe you.

    Accounts payable on the other hand are a liability account,


    representing money that you owe another business.

    Let’s say you send your friend Keith’s business, Keith’s Furniture
    Inc., an invoice for $500 in exchange for a logo you designed for
    them.

    When Keith gets your invoice, he’ll record it as an accounts


    payable in his books, because it’s money he has to pay someone
    else.

    You’ll record it as an account receivable on your end, because it


    represents money you will receive from someone else.

    Does accounts receivable count as revenue?


    Accounts receivable is an asset account, not a revenue account.
    However, under accrual accounting, you record revenue at the same
    time that you record an account receivable.

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