Accrued Expenses vs Accounts Payable - What is the Difference?
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- čas přidán 5. 08. 2024
- Accrued Expenses and Accounts Payable are both accounting terms for costs that have been incurred and recognised in the accounts but have not yet been paid. But while they appear to be the same thing, there are some differences.
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Timestamps:
00:00 Accrued Expenses vs Accounts Payable - What is the Difference?
00:08 Accrued Expenses vs Accounts Payable
01:13 Accrued Expenses vs Accounts Payable Trade Creditors
02:00 Accrued Expenses vs Accounts Payable
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The explanation is as clear as the mirror
Thank you, Sir.
Love your videos. So clear and well narrated. Quick question... I'm a student so please excuse me if I am being daft but at 4:44 do you mean accrued expense not accrued revenue. Also, I though Accounts Payable was only for suppliers of goods that you are going to resell not for expenses. Why would the $5000 expense be in Accounts Payable?
It's a late answer to your question but yes, it's supposed to be accrued expenses NOT revenue. I'm also guilty of this but always remember that it's normal to make a mistake so don't panic if you ever do. Just goes to show how we humans are sometimes.
As for the 5000, it's recorded in the Accounts payable and not on accrued expense because you've already received a bill. That's the difference between accounts payable and accrued expenses - BILL. Bill does not mean cash/money but a document that states the 'what' and it's matching amount you are obligated to pay. So, if you have an expense/ a payable (that's the other term)/ something needed to be paid for, ask yourself this question: "Is there a bill received?"
Yes? Then, it's an accounts payable.
No? Then, it's an accrued expense.
And you're not being daft. You're being smart for asking when you do not know and be guided on the correct path rather than pretending and causing yourself to fall down a cliff. Enjoy learning 😊.
Error noted - Iis an accrued expense and not accured income.