It is the basic of the accounts. It is very necessary for the commerce people to know about the Accounts Payable v/s Accrued Expense. At the making the profit and loss account and balance sheet it is very necessary knowledge about the account payable and accrued expenses.
Accounts Payable v/s Accrued Expenses
Accrued expenses: These are those expenses which are incurred but not yet paid in cash is known as accrued expenses. Accrued Expenses are expenses which relate to the current period. Accrued expenses do not include recurring expenses. Accrued expenses are also known as prepaid expenses. Examples of accruals are interest payable, taxes payable, and wages payable.
At the time of adjustment of making the entry at the end of year:
- It is shown on the liability side of the balance sheet.
- It is shown on the debit side of the profit and loss account.
It is also shown on the liability side of balance sheet at the end of accounting year.
For example: suppose when wages Rs. 1000 & accrued wages 500 which are incurred but not yet paid in cash then entry is both in P&L and balance sheet:
Profit and loss Rs.100.00
To Accrued Wages Payable $100.00
Accounts Payable:
Accounts Payable is a short term liability of an organization. It's a process by which a company buys goods and services on credit and is billed in the form of an invoice, which states the terms and conditions of the payment. Accounts Payable is recorded as a current liability in the balance sheet... Accounts Payable are supported by invoices or billing statements. This liability is different than accounts payable, which is the liability account for bills that have been received by a business from purchases on credit.
Accounts Payable is a short term liability of an organization. It's a process by which a company buys goods and services on credit and is billed in the form of an invoice, which states the terms and conditions of the payment. Accounts Payable is recorded as a current liability in the balance sheet... Accounts Payable are supported by invoices or billing statements. This liability is different than accounts payable, which is the liability account for bills that have been received by a business from purchases on credit.
A company's outstanding debts, or liabilities, to vendors for purchases of goods and services made on credit.