- Learn Basic Accounting in Less than 1 Hour!
- Accounting Basics
- What are Accounting Principles | List of Top Accounting Principles
- Accounting Cycle
- Accrual Accounting Basis | Top Examples | Advantages Disadvantages
- Cash Basis Accounting
- Matching Principle of Accounting
- Conservatism Principle of Accounting
- Cash Accounting | Top Examples | Advantages & Disadvantages
- What are Accounting Policies? | Top Examples | Significance
- Accounting Estimates
- Cash Accounting vs Accrual Accounting | Top 9 Differences
- Operating Cycle
- Fiscal Year vs Calendar Year | Top Differences | Examples |
- Debit vs Credit in Accounting
- Double Entry Accounting System
- Journal in Accounting
- Ledger in Accounting
- Journal vs Ledger
- What is Trial Balance ? | Examples | Steps | Prepare | Errors
- Reconciliation of Books | Types, Best Practices | Useful Tips
- Petty Cash | Meaning | Template | Accounting | Example
- Debit Note | Debit Notes Accounting & its Top Characteristics
- Credit Note
- Debit Note vs Credit Note | Top 7 Differences (Infographics)
- Balance Sheet
- Balance Sheet
- Accounting Equation
- Assets vs Liabilities | Top 9 Differences (with Infographics)
- Trial Balance vs Balance Sheet | Top 10 Differences You Must Know!
- Revenue Reserve vs Capital Reserve | Top 7 Differences
- Capital Receipts vs Revenue Receipts | Top 8 Differences
- Capital Lease vs Operating Lease | Top Differences You Must Know!
- Debt vs Equity Financing | Advantages | Disadvantages | Example
- Internal vs External Financing | Top 7 Differences (Infographics)
- Cash and Cash Equivalents | Examples, List & Top Differences
- Cash Equivalents
- 3 Types of Inventory | Raw Material | WIP | Finished Goods
- Current Assets
- Non-Current Assets
- Accounts Receivables? | Definition, Accounting Examples
- Accrued Revenue
- Liquid Assets
- Marketable Securities on the Balance Sheet | Top Examples
- Prepaid Expenses
- Tangible vs Intangible Assets
- Net Tangible Assets | Calculate Net Tangible Assets Per Share
- Tangible Assets
- Salvage Value
- Fixed Capital vs Working Capital | Top 8 Differences (Infographics)
- Accounts Payable | Days Payable Outstanding | Formula |
- Current Liabilities | List of Current Liabilities on Balance Sheet
- Accrued Liabilities
- Notes Payable
- Deferred Expenses
- Unearned Revenue (Sales)
- Deferred Revenue (Income)
- Current Portion of Long-Term Debt (CPLTD) | Balance Sheet
- Long-Term Debt in Balance Sheet
- Financial Liabilities | Definition, Types, Ratios, Examples
- Long-Term Liabilities
- Accounts Receivable vs Accounts Payable
- Shareholders Equity
- Shareholders Equity Statement
- Par Value of Stock
- Share Capital
- Outstanding Shares (Definition, Formula) | Stocks Outstanding
- Additional Paid-in Capital on Balance Sheet
- Retained Earnings (Formula, Examples) | How to Calculate?
- How to Calculate Net Worth of a Company | Formula | Top Examples
- Shareholder Equity vs Net Worth | Top 5 Differences You Must Know!
- Common Stock vs Preferred Stock | Top 8 Differences You Must Know
- Stock vs Option
- Stock vs Mutual Funds
- Income Statement
- Income Statement | Top Examples | Template | Format | Analysis
- Cost of Goods Sold
- Direct Costs
- Indirect Costs
- EBIT vs EBITDA | Top Differences | Examples | Calculation
- Depreciation – Formula | Types | Most Comprehensive Guide
- EBITDA vs Operating Income
- Straight Line Depreciation Method
- Unrealized Gains (Losses)
- Non Cash Expense
- Interest vs Dividend | Top 9 Differences (with Infographics)
- EBITDA vs Net Income
- EBIT vs Net Income
- EBIT vs Operating Income
- Accounting Profit vs Economic Profit
- Income Tax vs Payroll Tax
- Gross Income vs Net Income
- Profit vs Revenue
- Revenue vs Earnings
- Revenue vs Income
- Profit vs Income
- Revenue vs Sales
- Income Statement vs Balance Sheet | Top 5 Differences You Must Know!
- Statement of Comprehensive Income | Items | Colgate Example
- Cash Flow Statement
- Cash flow from Operations | Formula, Calculations & Examples
- Cash Flow from Investing Activities (Formula & Top Examples)
- Cash Flow From Financing Activities | Formula & Calculations
- Fund Flow Statement
- Direct vs Indirect Cash Flow Methods
- Cash flow vs Net Income | Key Differences & Top Examples
- Cash Flow vs Fund Flow | Top 8 Differences (with Infographics)
Accounts Receivable vs Accounts payable Differences
In business, you need to purchase goods on credit and you also need to sell goods on credit. Since the business purchases and sells in bulk, it has to consider both credit purchase and credit sales.
- When you purchase on credit, you need to pay off a certain amount to your creditors. This amount that you owe as a business to your creditors is called accounts payable.
- On the other hand, when you sell on credit, you would receive a certain amount after some time from your debtors. This amount that you’re yet to receive is called accounts receivable.
Both of these are important for business because they both help a business know how much the business needs to pay off and how much the business would receive.
In this article, we will go through a comparative analysis between them.
Accounts Receivables vs Accounts Payable Infographics
There are many differences between accounts receivables vs accounts payables. Here are the top most differences –
Accounts Receivable vs Accounts Payable – Key differences
Here are the key differences between accounts receivable vs accounts payable –
- Accounts receivable means you have sold goods on credit and you are yet to receive money for the goods you sold off. Accounts payable on the other hand means that you have purchased raw materials/goods on credit and you’re yet to pay off the creditor.
- Accounts receivable is a current asset. Accounts payable is a current liability.
- Accounts receivable stems from credit sales. Accounts payable stems from credit purchases.
- In the case of accounts receivable, money needs to be collected. In the case of accounts payable, money needs to be paid.
- Accounts receivable ensure inflow of cash. Accounts payable ensures outflow of cash.
Accounts Receivable vs Accounts Payable (Comparison Table)
|Basis for Comparison – Accounts Receivable vs Accounts Payable||Accounts Receivables||Accounts Payables|
|1. Meaning||The money that the business is yet to receive from its debtors is called accounts receivables.||The money that the business is yet to pay off to its creditors is called accounts payables.|
|2. Cause||Money is due for selling of products on credit.||Money is due for purchasing raw materials on credit.|
|4. Result||Cash inflow.||Cash outflow.|
|5. Movement of money||Money to be collected.||Money to be paid.|
|6. Responsibility||Lies on debtors.||Lies on the business.|
|7. Comprises of||Debtors and Bills Receivables.||Creditors and Bills Payables.|
Accounts receivables and accounts payables are two sides of one coin. Every transaction if it’s done on credit has to have an element of accounts receivable and accounts payable in it. If Company A sells on credit to Company B, Company A will be a creditor to Company B and Company B would be a debtor to Company A. That means, in one transaction there are both – accounts receivables and accounts payables.
Understanding these two concepts is very important. Especially if you’re starting a business and you would do a lot of transactions on credit (or “on account”), it is important that you identify two sides of the same coin. Identifying accounts receivables and accounts payable will reduce a lot of headaches for the business upfront.
This has a been a guide to the top differences between accounts receivables vs accounts payables. Here we also discuss accounts receivables and accounts payables differences with examples, infographics, and comparison table. You may also have a look at the following articles for gaining further knowledge in Accounting –
- Days Sales Outstanding (DSO)
- Days Payable Outstanding (DPO)
- Working Capital Ratio
- Average Collection Period Formula