Just as one company's purchase is another company's sale, the accounts payable of one company will be the accounts receivable of another company. Some accountants refer to this as symmetry.
To illustrate this, let's assume that Max Corporation receives $5,000 of goods it ordered from Super Supply Company on credit. This transaction will result in Max recording a $5,000 accounts payable (and a purchase), and Super Supply recording a $5,000 accounts receivable (and a sale).
To learn more, see the Related Topics listed below:
After working as an accountant, consultant, and university accounting instructor for more
than 25 years, Harold Averkamp formed AccountingCoach in 2003. His goal was to
share his knowledge and passion for teaching accounting with people throughout the
world at a very low cost. Read More...