Answers · Bookkeeping
Accounts Receivable vs. Accounts Payable
Accounts receivable is money customers owe the business; accounts payable is money the business owes vendors.
How it works
The rule, and what it turns on.
Subsidiary customer/vendor detail should agree to the general ledger and stale balances should be investigated.
Example
An accrual-basis $10,000 customer invoice creates revenue and A/R; collecting it later reduces A/R rather than recording revenue again.
Common mistakes
What we see go wrong, and what we do instead.
- Double-counting revenue on collection.
- Leaving duplicate/stale bills open.
A better approach
- Run aging reports monthly and resolve old items.
Authority
Where this comes from, so you can check it.
IRC §6001; Treas. Reg. §1.6001-1; IRS Publication 583; IRS Small Business Recordkeeping guidance.
Educational information, not individualized tax advice. Treatment depends on your facts, entity classification and tax year, and IRS instructions change. Confirm your own position with us before relying on it. Mint Associates does not provide legal services.
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