Accounts Payable

At the end of any given month, you have things you have used or purchased, but have not paid for. These are listed as accounts payable. When you enter these bills, your entry is debit expense, credit accounts payable. Each month, you need to make and keep a list of items that were in accounts payable at the end of the month. When you are closing out our sample month, you will have paid these bills, which were in AP the previous month, reducing your cash. Using your list, identify the checks written for items that were listed in accounts payable the month before. You already listed the expenses the prior month - so you don't list them again. The entry to show on your books that you have paid your accounts payable is: debit accounts payable, credit cash. Reduce your cash; reduce your accounts payable. Assuming you pay all your bills each month, this step will bring your accounts payable to zero (and if not, the accounts payable balance per your books should equal all the outstanding bills). Later, you will rebuild a new AP list for the current month.

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Expenses Paid by Cheque : Expenses Paid By Cash : Accounts Payable : Cash Discounts on Purchases : Petty Cash : Payroll : Sales & Customer Deposits : Accounts Receivable : Inventory : Deposits : Sale of Assets : Depreciation : Suspense : Month End Adjustments : Paper Trails

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This page last modified: 11 Mar 2008