Accounts payable are amounts a company owed to its suppliers for goods and services purchased on credit. The payable amount shown on the company’s balance sheet as a current liability under sundry creditors.
What is accounts payable process?
Invoice receive and verification
What you will consider before making of payment?
Need to consider below points before making payment to vendor/supplier.
To whom the payment is made to
Payment against which order or bill
Payment terms and conditions
Whether payment is due or over due
Any charges or taxes to be deducted
Need to check availability of funds in the bank
Payment through check/ NEFT/Wire
What is wire transfer?
Wire transfer is electronic payment method to transfer funds from one bank account to another bank account through SWIFT.
What you will consider to approve an invoice for payment?
Before making payment to invoice or bill, the following details should be considered.
Whether goods are received as per the purchase order or not
Need to check whether any damaged goods are received
Need to verify the purchase order with vendor invoice
Need to check whether any advance payment made
If any discount allowed by supplier for early payment
Check the bank balance before making payment
What is the difference between Consigner and Consignee?
Consigner is the owner of the goods and who take responsibility to deliver the goods to the consignee.
Consignee is the party who receives the goods and not owner of the goods. Most of the cases consignee is the buyer of the goods.
What is the entry when Rs.50,000 of goods are purchased?
Purchase A/c Dr – 50,000
CGST A/c Dr – 4,500
SGST A/c Dr – 4,500
To Vendor A/c – 59,000
What is 3 way matching?
The 3 way match will help to avoid paying incorrect payments.
Match invoice price with purchase order price
Match quantity billed by supplier with ordered quantity
What is a trade discount?
Trade discount is reduction from whole goods value, example it is given by the manufacturer to the retailer based on volume of purchases of goods like, 30% or 40% discount.
What is an early payment discount?
As per the terms and conditions mentioned in the purchase order supplier allow discount to buyer when payment made by the buyer before the due date.
Example, ABC company sold Rs.20,000 worth of goods to X company and payment terms are 30 days from the date of invoice. ABC company allowed 5% discount to X company, if payment is made within 10 days from the date of invoice.
What are some examples of current liabilities?
Current liabilities are liabilities to the company that may expect to pay within one year from the reporting date. These current liabilities will appear on the company’s balance sheet. The following are the some examples of current liabilities.