Accounts payable vs. Accounts receivable

Accounts payable vs. accounts receivable

Accounts payable tracks obligations to vendors; accounts receivable tracks claims against customers. Both are balance-sheet accounts and both require invoice-level matching under accrual accounting.

Reviewed by the Booksmrt bookkeeping teamLast reviewed 2026-07-27

The difference at a glance

Question	Accounts payable	Accounts receivable
Direction	Money the business owes.	Money owed to the business.
Balance-sheet class	Liability.	Asset.
Aging question	What is due and overdue to vendors?	What is due and overdue from customers?

Choose accounts payable when

You need vendor bill tracking.
Payment timing and due dates matter.
Expenses are recorded before payment.

Choose accounts receivable when

You invoice customers.
Collections and customer aging matter.
Revenue is recorded before cash collection.

Example

A vendor bill due next month creates payable; a customer invoice due next month creates receivable.

Common mistake

Coding bill payments directly to expense after the bill was already entered, or coding customer deposits directly to revenue after the invoice was recorded.

Common questions

Do cash-basis books have AP and AR?

They may track operational invoices and bills, but cash-basis financial and tax reporting generally follows cash timing.

Why do aging reports disagree with the balance sheet?

Common causes include unapplied payments, journal entries, date filters, customer credits, or bills posted outside the subledger.

Sources

Cash basis vs. accrual basis accountingCash basis is simpler and generally records receipts and payments when cash moves. Accrual basis records economic activity when earned or incurred, creating receivables and payables. Tax rules and reporting needs can limit the choice.Revenue vs. cash receivedRevenue describes what the business earned; cash received describes money that moved. They can differ because of accounting method, receivables, customer deposits, sales tax, transfers, loans, and owner funding.Balance sheet vs. income statementThe balance sheet answers what the business owns, owes, and has accumulated at one date. The income statement answers how much the business earned or lost over a span of time. The statements are connected through equity and net income.

Educational information only. Booksmrt provides bookkeeping services, not tax, legal, audit, or investment advice. Confirm material accounting and tax decisions with the appropriate professional.