Difference Between Accounts Payable and Accounts Receivable



Accounts payable and accounts receivable are terms that are associated with business. Accounts payable and accounts receivable are the two sides of a transaction. The terms themselves tell that they are different ‘“ one is payable and the other on is receivable.

Accounts payable are the amounts that a company has to pay for the goods or services it had brought. It is an amount that is not immediately paid. Accounts receivable is just the opposite of Accounts payable. Accounts receivable is the amount that a company has to get for the goods and services that it had sold. Like account payable, account receivable is also not realized immediately.

Accounts payable can be called as liabilities whereas the accounts receivable can be called as assets. Accounts payable means the company has to spend cash and accounts receivable means the company has to get cash. Accounts payable are a company’s debts that have to be paid within a given period in order to avoid default.

While accounts receivable keeps track of the money that the company has to get, the accounts payable keeps a track of the debts the company has to pay.

Though the procedures for accounts receivable and accounts payable are the same, the former one has more complex procedures as it relates to collecting money. In case of accounts payable, the companies may not have strict procedures.

The accounts payable and accounts receivable are developed in accordance to industry policies, standards and financial condition.

Accounts receivable usualy comes in the form of perating lines of credit. Accounts receivable are recorded as assets in a company’s balance sheet. On the other hand, accounts payable are recorded as liabilities on a company’s balance sheet.

Summary

1. Accounts payable are the amounts that a company has to pay for the goods or services it had brought. Accounts receivable is the amount that a company has to get for the goods and services that it had sold.

2. Accounts payable can be called as liabilities while the accounts receivable can be called as assets.

3. Accounts payable are a company’s debts that have to be paid within a given period in order to avoid default.

4. Accounts receivable keep track of the money that the company has to get. Accounts payable keep a track of the debts the company has to pay.

5. Accounts receivable are recorded as assets in a company’s balance sheet. On the other hand, accounts payable are recorded as liabilities on a company’s balance sheet.

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