Accounts Receivable & payable
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
07 February 2010
Hello sir
What are accounts receivable and payable?
Please explain the process involoved in it.
Please give the accounting entries for that
thanking you
What are accounts receivable and payable?
Please explain the process involoved in it.
Please give the accounting entries for that
thanking you
07 February 2010
Accounts receivable represents the amount which you can receive from your customers in respect of the sale of goods or services provided. It shows the amount of money people owe to you.
Accounts payable is just reverse of that. It represents the amount which you are required to pay to person from whom you purchased the goods or for the services received. It shows the amount of money you owe to the other person.
Ex. For Accounts Receivable > Let's say u sell inventory worth Rs.5000 to Mr. A on credit, So since no cash is received, you will record the amount due from Mr. A as Accounts Receivable
Accounting entry on sale of goods will be.
Mr. A (Accounts Receivable) - Rs.5000.....Dr
Sales - Rs.5000..Cr
On Receipt of payment from Mr. A
Cash/Bank - Rs.5000...Dr
Mr. A (Accounts Receivable) - Rs.5000...Cr
Ex. For Accounts Payable > Let's say u buy inventory worth Rs.5000 from Mr. B on credit, So since no cash is paid, you will record the amount due to Mr. B as Accounts Payable:
Accounting entry on Purchase of goods will be.
Purchases - Rs.5000...Dr
Mr. B (Accounts Payable) - Rs.5000...Cr
On making payment to Mr. B
Mr. B (Accounts Payable) - Rs.5000...Dr
Cash/Bank - Rs.5000...Cr
Accounts payable is just reverse of that. It represents the amount which you are required to pay to person from whom you purchased the goods or for the services received. It shows the amount of money you owe to the other person.
Ex. For Accounts Receivable > Let's say u sell inventory worth Rs.5000 to Mr. A on credit, So since no cash is received, you will record the amount due from Mr. A as Accounts Receivable
Accounting entry on sale of goods will be.
Mr. A (Accounts Receivable) - Rs.5000.....Dr
Sales - Rs.5000..Cr
On Receipt of payment from Mr. A
Cash/Bank - Rs.5000...Dr
Mr. A (Accounts Receivable) - Rs.5000...Cr
Ex. For Accounts Payable > Let's say u buy inventory worth Rs.5000 from Mr. B on credit, So since no cash is paid, you will record the amount due to Mr. B as Accounts Payable:
Accounting entry on Purchase of goods will be.
Purchases - Rs.5000...Dr
Mr. B (Accounts Payable) - Rs.5000...Cr
On making payment to Mr. B
Mr. B (Accounts Payable) - Rs.5000...Dr
Cash/Bank - Rs.5000...Cr
Querist : Anonymous
Querist :
Anonymous
(Querist)
07 February 2010
thanking you sir
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