Bookkeeping: Accounts Payable/Accounts Receivable And Receipts

An accounts payable (AP) is a liability for an amount owed to a creditor, usually for the purchase of goods or services.
Consider a buyer who makes a purchase and takes delivery of the goods but does not pay the seller immediately. The seller is, therefore, selling “on credit.” As a result, the buyer and seller now have a creditor-debtor relationship. The processing of accounts payable is a core responsibility of bookkeepers. The bookkeeper may issue and monitor purchase orders (which result in accounts payable) and then match them with invoices when they are received. The bookkeeper then codes the invoices with the proper general ledger information and obtains approval for payment. Bookkeepers check to pay the invoices and ensure bills are paid in a timely manner. 

Accounts receivable (AR) are legally enforceable claims for payment held by a business for goods supplied and/or services rendered that customers/clients have ordered but not paid for.  AR is sort of a mirror to AP. The AR process begins with billing customers for goods or services. Bookkeepers prepare and send invoices to customers and ensure they are entered into the proper accounts in the accounting system. Customer statements are prepared and sent out and bookkeepers often contact customers with past-due invoices to make payment arrangements.

This course focuses on important concepts bookkeepers should be prepared to manage/understand in relation to all the components of accounts payable and accounts receivable. We review the concepts of purchase orders, receipting, payments, billing, collections, and accounts receivable aging.

NOTE: This course is one of a series of courses developed for the Professional Bookkeeping Certification program on Illumeo. The full curriculum of courses will provide you with the ultimate foundation to a career as a bookkeeper.

Note: Information within this course comes from readily available public domain documents and is utilized by the trainer as a supplement for relaying the course content.