Chart of Accounts for Accounting: Structure & Examples
Warren Team
Continue learning
Related articles
Compare side by side
Key terms
- Accounts ReceivableThe money that customers owe a business for goods or services that have been delivered but not yet paid for. Accounts receivable is recorded as an asset on the balance sheet because it represents future cash the company expects to collect. Managing accounts receivable efficiently is crucial for maintaining healthy cash flow, and businesses often track metrics like days sales outstanding to monitor how quickly they collect payments.
- Accounts PayableThe money a business owes to its suppliers, vendors, and creditors for goods or services received but not yet paid for. Accounts payable is recorded as a liability on the balance sheet and represents short-term obligations the company must fulfill. Effectively managing accounts payable helps businesses maintain good supplier relationships, take advantage of early payment discounts, and manage cash flow strategically.
Get your first personalized plan in minutes
Free to start, no credit card required. Warren reads your accounts, it never moves money.