accounts payable vs accounts receivable

Learn the key differences between accounts payable (AP) and accounts receivable (AR) in business accounting. Accounts payable represents money your business owes to suppliers or creditors for products or services purchased on credit, while accounts receivable refers to money your business is owed by customers for goods or services provided. AP is considered a liability on the balance sheet, whereas AR is an asset. Understanding how to manage both is essential for maintaining healthy cash flow, accurate financial reporting, and ensuring your business remains financially stable. Discover more about AP vs AR and how they impact your financial statements.