difference between account payable and receivable

Understand the key difference between accounts payable (AP) and accounts receivable (AR) in business accounting. Accounts payable refers to the money a company owes to suppliers and creditors for products or services purchased on credit, while accounts receivable represents the money owed to a business by its customers for goods or services provided. AP is classified as a liability on the balance sheet, whereas AR is considered an asset. Knowing how to manage both is essential for maintaining healthy cash flow and ensuring the financial stability of your business. Learn more about AP and AR and how they impact your business’s bottom line.