Accounts Payable Description
Companies and businesses have huge transactions pertaining to their accounts payable process. They receive goods and services from various suppliers and they need to manage timely payments to these creditors to avoid default and adhere to the payment terms.
Accounts Payable Description
“Accounts Payable” is used as a generic term to represent various different things related to AP process. Some of the common usage of the term is:
Accounting Entry: As explained before “Accounts Payable” refers to the accounting entry that indicates a short term liability payable to the supplier of goods and services for the goods supplied or services rendered. It is a short term liability and categorized as Current Liabilities under the balance sheet head “Liabilities”.
Accounts Payable Sub Ledger: Companies and businesses have huge transactions pertaining to their accounts payable process. They receive goods and services from various suppliers and they need to manage timely payments to these creditors to avoid default and adhere to the payment terms. They use a subsidiary ledger generally referred to as “Accounts Payable Sub Ledger” and sometimes just as “Accounts Payable”.
Accounts Payable Process: Accounts Payable term is also used to refer to the accounts payable process. This process involves receiving the goods or services, verifying the quantity and quality with the Supplier Invoice and releasing the payment as per the agreed payment terms.
Accounts Payables Department: As companies have large number of transactions related to AP Process, hence many a times they need a separate division, branch or department to manage and handle all the AP related transactions. That department is referred to as Accounts Payable Department and sometimes just as Accounts Payables.
Eventually once we understand the accounts payable process and what are its elements we can easily understand what is being referred to at any point in time.
Related Links
You May Also Like
-
When products arrive at a facility, there need to be a defined process to let them in. The process for accepting inventory when it arrives is called "Receiving". Any warehousing operation must be able to receive inventory or freight from trucks at loading docks and then stow them away in a storage location. Receiving often involves scheduling appointments for deliveries to occur, along with unloading the goods and performing a quality inspection.
-
Transport operations are often divided into full load and part load and due to economies of scale, the unit costs are higher for part loads. Our customer needs several part loads delivering, so it can reduce costs by consolidating these into full loads. Then it gets all the part loads delivered to a warehouse near the suppliers, consolidates them into full loads, and pays the lower costs of full-load transport to its operations.
-
Warehouse management and distribution logistics involve the physical warehouse where products are stored, as well as the receipt and movement of goods takes place. Warehouse management aims to control the storage and movement of products and materials within a warehouse. These operations include the receipting of inwards goods, tracking, stacking and stock movement through the warehouse.
-
Payables are often categorized as “Trade Payables” & “Expense Payables”. “Trade Payables” are the monies due for the purchase of physical goods that are recorded in Inventory. “Expense Payables” are the monies due for the purchase of goods or services that are expensed.
-
Understand what we mean by accounts payable. Why the process is called accounts payable and what are the other names by which this process is known as. Download a ready recokner to keep with you.
-
Accounts Payable Journal Entry
Although in the large organizations the Procure to Pay Accounting process starts when the purchase order for supply of goods is released to the supplier. To keep things simple in the beginning we will discuss the core accounting entries related to the Accounts Payables process.
-
Miscellaneous Warehouse Processes
At the end of each inventory control, the Contractor provides the Ordering Person with an inventory report which contains a list of all stock adjustments. The Ordering Person uses the report to create, by use of his/her own means, necessary value and accounting adjustments related to the stock. Let us look at some to the mislaneous warehouse processes not covered earlier.
-
After products have been received and passed a quality inspection, they need to be stored so that you can find them when you need them. This process is called putaway. The spot where you store a particular product is called a location. One section of a warehouse might have small locations for light items; another area may have large locations on the floor for heavy items.
-
Subsidiary Ledgers – AP Ledger
An accounts payable invoice gets recorded in the Account Payable sub-ledger at the time an invoice is received and validated that the respective goods corresponding to the invoice have been received. Then it is verified and vouchered for payment as per the payment terms agreed with the Supplier.
-
Overview of Third-Party Logistics
Third-party logistics (abbreviated as 3PL, or TPL) is an organization's use of third-party businesses to outsource elements of its distribution, warehousing, and fulfillment services. A third-party logistics provider (3PL) is an asset-based or non-asset based company that manages one or more logistics processes or operations (typically, transportation or warehousing) for another company.
