Accounting for Payables

It’s a common practice nowadays that business provide goods on credit, i.e. goods are being delivered before payments are being made. Sellers, who are due to be paid by the business is known as payables. In this chapter, students are to learn about accounting for payables which include the types of payables, the process involved in purchasing activities and when should the transactions
be recorded based on accrual concept. The terms of payments will be introduced including when a business can take the opportunity of getting discounts. This chapter will also cover the adjusting entries required in relation to accrued expenses and unearned revenue. Students will also learn to use is ratios related to payables i.e. trade payables turnover, Days Payable Outstanding (DPO)
and Average Payment Period (APP) to measure the effiency of the business in settling/managing its debt.