AP AND AR

Accounts Payable

Money which a company owes to vendors for products and services purchased on credit. This item appears on the company's balance sheet as a current liability, since the expectation is that the liability will be fulfilled in less than a year. When accounts payable are paid off, it represents a negative cash flow for the company.

Accounts Receivable

Money which is owed to a company by a customer for products and services provided on credit. This is treated as a current asset