Overview of Accounts Payable

Learn the concept of

Accounts Payable Process
and its role in any
automated accounting
package including ERP’s.
Understand the key
functional areas of Accounts
Payable.

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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 an 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.

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Define Accounts Payable
UTILIY COMPANIES
Provides 
Services

Raises   Invoices

Accounts
Payable
For
Customer

Makes Payment

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Accounts Payable Description

Accounting Entry
Sub Ledger
Process
Department
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 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

Accounts Payable Journal Entry

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Subsidiary Ledgers – AP Ledger
Imagine what the size of your General Ledger would be if
you have 8000 different suppliers sending you more than
2000 items that you trade in? Subsidiary Ledgers help
manage and store specific information regarding each of
the control accounts in your GL. and Sub Ledger for AP is
called AP Subsidiary Ledger.

Accounts Payable • Manage Suppliers and Payments

Accounts Receivable • Manage Customers and Receipts

Inventory • Manage Item Prices and Movements

Cash Management • Manage Cash and its reconciliation with Bank

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Account Payable Process
Issue  Receive  Inspect 
PO Goods Goods

Enter  PO  Receipt

Invoice Match Match

Release Make  Bank 

Payment Payment Recon
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Accounts Payable Department
The business
department that is
responsible for
making payments
owed by the company
to suppliers and other
creditors is also often
referred to as Account
Payable (AP).
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