Accounts Payable - Accounts Receivable

Accounts Payable :- An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable entry is found on a balance sheet under the heading current liabilities.

Accounts Payable are often referred to as 'Payables'.

Another common usage of  AP refers to a business department or division that is responsible for making payments owned by the company to suppliers and other creditors.

Journal entries - Accounts Payable Process

When you purchase a good or service on account the journal entry is

Debit - The appropriate expense account for the amount
Credit - Accounts Payable for the amount

When  the account is paid the journal entry is

Debit - Accounts Payable for the amount
Credit - Cash for the amount.

Accounts Receivable - Accounts Receivable is a current asset that reports the amount that a companys customers owe the company for the goods or services provided on credit.

Journal entries - Accounts Receivables Process 

Journal entry when billing customers

Debit - Accounts Receivables
Credit - Revenue account

When account receivable is collected

Debit - Cash account
Credit - Accounts Receivables account