Accounts Payable vs. Accrued Expense. Here are real life examples
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- Опубліковано 15 чер 2024
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Chapters:
00:00 Summary of video
01:10 Definition of Accounts Payable and Accrued Expenses
03:00 How to locate on the financial statements
04:34 How to record Accounts Payable
06:59 How to record Accrued Expense - example vacation liability
I got some questions around the difference between Accounts Payable and Accrued Expenses. I made this video to clarify with examples.
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Another great tutorial. The way you explain the concepts with examples is super helpful. You're the best!
Thank for this content. I started as an accounting major but ended up switching with a degree in Bus Mgmt. Have always wanted to get into a career in Accounting. Landed a series of jobs from collections and accounts payable for 15 years and finally landed the perfect job as an Accounting Analyst. Your controller academy and accounting interview tips helped prepare me with the courage and confidence to even apply for the position. I'm a big fan and grateful for you sharing your understanding of Accounting. We appreciate you for it!
Thank you so much for the kind words! Interesting background. Keep hustling and it will pay off, that's my experience
You speak for lots of people. Thank you, Bill.
Thank you so much Bill. I got helpful
This is a great real work day example! Thanks
You're very welcome!
This really cleared up a lot for me.
Thank you Mr. Hanna! I truly appreciate your informative videos, I am learning a lot of good stuff from you! Thx
Thanks so much!
Thank you so much! I have finally understood! Super clear
Glad it helped!
I'm a junior in college, and this helps a lot! Thank you!
Happy to help!
Thank Bill Hanna for your helpful videos
You are very welcome
Thank you so much Bill. I really needed this
Glad it was helpful!
Thank you very much
Cheers from Mexico! Thank you for the content!
hola Eduardo
thank you for these videos! love from Ghana
You're so welcome!
Good one there, thanks for this presentation.
My pleasure!
Wonderful content.
Glad you think so!
Thank you for clarifying this two types of accounts and going down into detail on the accrue one. I'm currently at my fourth year of collage and doing my acconting practices and this content has been of great help.
Glad it was helpful!
I'm about to have an interview in 30 min XD, (accountant) I was going thought your videos for the past 3 days, Really helpful. Thank you :)
great video, loved it thanks! can we have more in depth videos like this and quickbook reference is great too.
Sure thing!
Clarifying Accounts Payable vs Accrued Expenses for Accountants
**2. Summary:**
This video aims to clear up confusion between accounts payable and accrued expenses for accountants entering the field. The content covers the definitions of accounts payable and accrued expenses, their placement on financial statements, and the recording process. Real examples with numerical data illustrate how to record accrued expenses, specifically focusing on vacation accruals.
**3. Key Highlights:**
- **Accounts Payable:** Represents amounts recorded from vendor invoices for goods and services; recorded when a vendor invoice is received, and payment is pending.
- **Accrued Expenses:** Obligations to pay in the near future, recorded to comply with accrual accounting; includes vendor invoices not yet approved or received and compensation accruals like vacation balances.
- **Location on Financial Statements:** Accounts payable and accrued expenses are found on the income statement under various elements and under current liabilities on the balance sheet.
- **Recording Process:** Demonstrates how to record accounts payable using an example invoice and explains the accrual process, particularly for vacation accruals, providing a downloadable Excel file for further understanding.
**4. Conclusion/Key Takeaways:**
Understanding the distinctions between accounts payable and accrued expenses is crucial for accurate financial reporting. The video emphasizes the importance of adhering to accrual accounting, especially for businesses exceeding a million dollars in revenue, and provides practical examples for recording accrued expenses like vacation liabilities.
**5. Purport:**
This video serves as a comprehensive guide for accountants, offering clarity on distinguishing between accounts payable and accrued expenses. By providing real examples and practical insights, it aids in the proper recording and understanding of these concepts, facilitating more accurate financial reporting.
Thank you!
Amazing Video. Can you make a video on Accounting for Non-profit Organization
Super clear. What’s super confusing are automatic journal reversals! Takes me forever to analyze what the actual incremental expense was in the month 😅
good point, I'll show how I do GL analysis in a separate video
@@TheFinancialController 🙏
You are so awesome!! You are very helpful and you saved my career! Thank you!
You are so welcome!
Can you make a video on cash flow projections cash flow forecasts and cash projections ?
Another video I was looking for was on gl account reconciliations, usually done on balance sheet accounts in excel?
Thank you so much!
Good day I recently came across your channel. Do you have any videos on understanding and recording revenues? I checked out your courses on your website but I did not locate any with that content.
TIA.
If the invoice should be registered as part of both G&M and S&M, how do you technically do it in quickbooks?
In addition, do you treat all invoices by default as accrued, unless it is approved?
How about accrued revenue vs. Contingent asset? Following conservatism, how do accountants recognize accrued revenue?
Can I get Excel sheet for Accrued expense & employees vacation
Hi Hanna. Thanks for the great info you put out there. I'm making a career change to accounting from years of sales positions. I have a finance degree many years ago but no accounting experience job wise. From what I have heard it may be easier to start in an A/P or A/R position. What is the best way to learn A/P and A/R so I am not clueless. Would your course teach me enough, should i take a accounting fundamentals class, or can I learn on the job? Any feedback would be appreciated. Thanks!
I cover both AP and AR in my controller academy course.
Hi,
I have a doubt please between "Normal" Budgeting and Financial Modeling.
I have seen many times that, in a "Financial Modeling" (usually used for valuation, M&A, Strategic Planning, and similars) there are NOT calculated things as costs of the products, raw materials, direct and indirect materials, direct and indirect labor, planned level of production, etc., all in a depth "level of detail" as, for example, in a "Normal" Budgeting.
Am I right? Or not?
I mean, it is, or not necessary to "includes" in a "Financial Modeling" the level of detail and calculations like costs, production, etc? And why or why not?
What is the difference between a a "Financial Modeling" and a "Normal" Budget process? Are the times? (1, 2, 3, N years) What are used for? What more?
If I do a Business Plan, do I need a “normal” and detailed budget, or a a Financial Modeling? and for a Strategic Planning?
Because both looks forward to the future, and both finish in the three statements (Balance, P&L and Cash Flow), I'm some confused.
Thank you in advance for your advice!
Hi Hanna, Could you please make detailed video about PO and different type of PO, 2 way match and 3 way match and complete P2P cycle (from identifying products, Purchase requisition, PO, GRIR, Payment) , further more thanks for your informative videos and I really like your way of explanation and you made accountancy easy by explaining in real time situation.
Thanks for the idea!
dear Hanna thanks a lot , please advice why we record the first JE credit side to the account vacation lability and the last JE you credit the accrued vacation liability ?
tanks ,
Hi there, they are the same liability account. I must have added the word Accrued, but basically the same account
How do you record an insurance invoice that runs from 1st of April 2024 to the 31st of March 2025.
There are two invoices, one for property liability of 10,000 and the other is for Directors liability of 500. Invoice date is as of the 1st of April 2024. But the policy renewal runs from April 2024 to March 2025.
Bill this can be so confusing, sometimes, the way I look at these two is “AP have already received a bill VS Accrued Exp we expect to receive a bill for this”… would you agree with this mindset ?
Does the controller academy count towards CPE? I would think if I can get CPE from the earmark app by listening to podcasts that your academy should be able to get set up that way too. Thanks.
Alan. I am working on this and should be done early 2024
@@TheFinancialController oh man you replied quick. I so love your channel. I’m still in school but I’ll definitely be looking to you once I graduate.
Why is there two methods short method and long method of closing the Year-end?
Instead of trueing up the vacation liability, couldn’t you also book the accrual as a reversing entry and then reaccrue in full each month? You wouldn’t need to keep track of the running balance for each month with this method.
You can
Bonus Accrual
Hi Hanna, I am trying in Job in UAE and from last 2 months and given only 2 interviews and 1 interview I got rejected because I have told to interviewer AP and AR reconciliation is part of Balance sheet reconciliation and however in SAP, we have different model for sub ledger like AP, AR. But she told that AP and AR is not balance sheet reconciliation. Could you please clarify about this?
Strange, you are correct that AP and AR are balance sheet reconciliations
🚀🚀
hi
Hey Bill, are you not on LinkedIn?
I am
What is your Payroll Accural Rule? last check date?
my rule is make sure all 30 or 31 days of the month of salaries/tax are recorded, either via recording the actual payroll, or if last check date is Nov 28th, then accrue the 2 last days of salaries/benefits/tax
I still find it hard to understand, in theory both are obligations that the company has to pay?the difference could be said that one is a provision like the one shown in the example of the vacations?
correct
@@TheFinancialController Thanks for your answer Bill as always good explanations.
As a statistic student major tried jump in financial analyst job field. Why you guys like to make something simple so difficult?
Cry about it
Plzzz Would you like to more Slowly Slowly... I can't understand properly