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Accounts payable account is credited when the company purchases goods or services on credit Accounts payable is a credit account, as it's a liability account The balance is debited when the company repays a portion of its account payable.
Since accounts payable is a current liability for the business, it usually has a credit balance Since all postings from the general journal are made to one account in the accounts payable ledger, will a particular creditor always have a credit balance When the company pays off this liability, the accounts are debited
However, at times, there could be a debit balance in the accounts payable ledger.
As the liabilities, accounts payable normal balance will stay on the credit side Actually, this is the same for all liability accounts On the other hand, the asset accounts such as accounts receivable will have a normal balance as debit It is useful to note that a/p will only appear under the accrual basis of accounting.
Accounts payable is a liability on the right side of the accounting equation and is normally a credit balance Accounts receivable is an asset on the left side of the accounting equation and is normally a debit balance. This is because accounts payable is a liability account, meaning that under standard accounting practices its balance represents money you owe to suppliers This is also known as a normal credit balance, as liabilities typically increase with credits and decrease with debits.
Since accounts payable is a liability account, it should have a credit balance
The credit balance indicates the amount that a company or organization owes to its suppliers or vendors. While preparing an account if the debit side is greater than the credit side, the difference is called “debit balance” So, if debit side > credit side, it is a debit balance Above example shows the debit balance in the cash account (by balance c/d) which is shown on the credit side.
Accounts payable represent money owed to vendors and suppliers, making it a current liability account Because of that, your accounts payable balance should always be a credit and recorded on the right side of the general ledger.
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