Posted by: logan August 3, 2020
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Account and Finance scholars please help me to clear my confusion.
https://www.investopedia.com/ask/answers/031015/whats-difference-between-accrued-expenses-and-accounts-payable.asp
Accrued Expenses vs. Accounts Payable: Example
For example, consider a company that pays salaries to its employees on the first day of the following month for the services received in the prior month. So, an employee that worked in the company all of June will be paid in July. At the end of the year on December 31st, if the company’s income statement recognizes only salary payments that have been made, the accrued expenses from the employees’ services for December will be omitted.
By contrast, imagine a business gets a $500 invoice for office supplies. When the AP department receives the invoice, it records a $500 debit in the accounts payable field and a $500 credit to office supply expense. As a result, if anyone looks at the balance in the accounts payable category, they will see the total amount the business owes all of its vendors and short-term lenders. The company then writes a check to pay the bill, so the accountant enters a $500 debit to the checking account and enters a credit for $500 in the accounts payable column.
Stated journal entries are quite opposite. Supply expense should be Debited and Accounts payable should be credited.
When check is written to pay account payable: accounts payable is going down should be Debited and cash/bank account is going down should be credited.
What am I missing ? My journal entries are quite opposite that Investopedia.
Last edited: 03-Aug-20 08:55 AM