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Overview of Accounts Payable

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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.

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

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UTILIY COMPANIESProvides Services

AccountsPayableFor

Customer

Makes Payment

Raises   Invoices

Accounts Payable Description

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Accounting Entry

Sub Ledger

Process

Department

Accounts Payable Journal Entry©Chartered Technofunctional Institutewww.technofunc.com

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

Subsidiary Ledgers – AP LedgerImagine 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.

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• Manage Suppliers and PaymentsAccounts Payable

• Manage Customers and ReceiptsAccounts Receivable

• Manage Item Prices and MovementsInventory

• Manage Cash and its reconciliation with BankCash Management

Receive Goods

Account Payable Process

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Issue PO

Inspect Goods

PO Match

Enter Invoice

ReceiptMatch

Make Payment

ReleasePayment

Bank Recon

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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TECHNOFUNC

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