Accounts Payable

Quick Books Course

Accounts Payable Definition
 Accounts payable is the amount owed for the purchase of
goods or services at a specific date. It is the money that a
company owes to vendors for products and services purchased
on credit extended in the normal course of business.
 As a general practice suppliers offer to their customers credit,
which is a payment arrangement to pay for a product or service
after it has already been received.
 Accounts Payable is presented as Current Liabilities under the
Liability section of the Balance Sheet. It represents a negative
cash flow for the company. Accounts payable are often referred
to as "payables".
 Accounts Payable is considered as Current Liability, meaning
that it is a short term credit extended to the business expected
to be fulfilled in less than a year.
OVERVIEW
 The accounts payable process plays an important role under the
accounting process. Companies maintain a vigilant and active
department for maintaining accounts payable depending upon the
Purchases of goods and services the company undertake during a
fiscal year.

 If the accounts payable department is not strong enough to track the

outstanding dues at the end of each payment period, then it will cost
them time and money for tracking the payment to be made to
vendors at the right time.

 Delayed or no payment can result in penalties on late payment,

interest, discount waivers, duplicate payments, wrong payment to
vendors or additional payments, etc.
AP Explained
Accounts Payable Journal Entry
 When Goods Are Received:
◦ Dr Inventory Account A/c
◦ Cr Accounts Payables A/c

 When Payment is Made:

◦ Dr Accounts Payable A/c
◦ Cr Cash/Bank A/c
Subsidiary Ledgers – AP Ledger
Account Payable Process
Accounts Payable Department
Benefits of a Robust AP Dept.
 Improves the payment cycle.
 Building vendor’s confidence.
 Reduction of additional liabilities.
 Effective creditor’s management.
 Timely payments of Bills.
 Better Time Management with improved staff efficiency.
 In-Depth study of accounts payable expenses.
AUDITING
 Nature of payment to be made.
 Actual Amount due to the vendor.
 Checking full contact details of the vendor for which the amount is
due.
 Reconciling the purchase order with the invoice received against
value of goods.
 Checking the due dates of the invoice.
 Checking the description of goods in the invoice with the order
placed.
 Any Advance payment made to the supplier against the purchase
order.
 Status of defective goods, received and goods returned.
 Debit note issued by vendor.
 Verification of taxes charged on the gross amount.
 Any other on spot verification or auditing.
METHODOLOGY FOR A/P
QUALITY CHECK

SEND INVOICES WITH ACCOUNTS PAYABLE ST.

:
AUDITING
:

:
FINAL OUTPUT