Accounting Fundamentals: Accounts Payable
What does a PO typically include?
PO Number, date prepared, company name, vendor name, and contact information for business contact
A vendor file maintenance tip -
Use vendor invoices instead of vendor statements to prevent overpaying
A Vendor is also known as...
a supplier
Accounts Payable
accounting entries representing the money a company owes to creditors for items purchased on credit
In the accounts payable process, the invoice is approved before or after payment is made
before
Purchase on Account
business (or person) which receives the good or service and promises to pay at a later date; also referred to as "purchasing on credit"
The three-way match involves making sure these documents are in agreement-
company purchase order, company receiving report and vendor invoice
Accounts Payable increases when a company buys a good or service on-
credit
A Vendor Invoice includes:
description of the company order, items the company received, cost of each item, total cost of the order and the payment terms.
Vendor File
document or file which provides information about company vendors
Vendor Invoice
document provided to companies when they buy items on account
Purchase Order
document which authorizes a buyer to receive goods/services from a seller
Maintaining a a vendor file prevents:
late product shipments, late/duplicate payments and wasted time
Vendor Statement
lists all amounts owed from previous invoices
Vendor
person or business which provides goods and services to a company
The accounts payable process should include internal controls in order to-
prevent paying a fraudulent invoice, paying an inaccurate invoice, paying a vendor invoice multiple times, and be sure all vendor invoices are recorded.
Credit Terms
provides information about when an invoice is due
Schedule of Accounts Payable
report which lists all amounts which are owed by a business; further ensures which accounts payable entries are properly recorded
Receiving Report
used to indicate the goods listed on the purchase order which were actually received
Accounts payable Subsidiary Ledger
used to track accounts payable transactions in more detail
A vendor file includes:
vendor invoices, receiving reports and vendor statements.