Decoding the Role of Accounts Payable

:chart_with_upwards_trend:AP determines how to record transactions, choosing between cash- or accrual- based accounting methods.

:ledger:The accounting equation (Assets = Liabilities + Equity) is the foundation of AP's work, emphasizing the balance between assets and liabilities.

:balance_scale:Double-entry bookkeeping is the language of AP, ensuring that for every transaction, there is an equal and opposite entry.

:money_with_wings:AP pays vendors by monitoring discount opportunities and manages liabilities through proper invoicing and documentation.

:detective:Fraud prevention is a critical aspect of AP's responsibilities, including verifying ID numbers and resolving payment discrepancies.

What is the difference between cash-based and accrual-based accounting?

—Cash-based accounting records transactions when money physically exchanges hands, while accrual-based accounting records transactions when goods or services are completed, regardless of the actual transfer of money.

How does double-entry bookkeeping ensure accuracy?

—Double-entry bookkeeping requires every transaction to have equal and opposite entries, ensuring the balance of accounts and accuracy of financial records.

What is the purpose of the accounting equation?

—The accounting equation (Assets = Liabilities + Equity) serves as the foundation for AP's work, emphasizing the balance between what an organization owns and what it owes.

How does AP manage vendor payments?

—AP monitors discount opportunities, verifies federal ID numbers, schedules and prepares checks, resolves discrepancies in purchase orders, invoices, and payments, and ensures proper credit is received for outstanding memos.

What are some measures AP takes to prevent fraud?

—AP takes various measures to prevent fraud, such as using positive pay systems, reconciling accounts, and issuing stop payments or purchase order amendments when necessary.

00:00In this video, Ralph from Nvoicepay explains the role and responsibilities of accounts payable (AP).

00:25AP determines how to record transactions, choosing between cash- or accrual- based accounting methods.

01:56The accounting equation (Assets = Liabilities + Equity) is the foundation of AP's work, emphasizing the balance between assets and liabilities.

03:24Double-entry bookkeeping is the language of AP, ensuring that for every transaction, there is an equal and opposite entry.

05:45AP pays vendors by monitoring discount opportunities and manages liabilities through proper invoicing and documentation.

06:42Fraud prevention is a critical aspect of AP's responsibilities, including verifying ID numbers and resolving payment discrepancies.

09:59AP manages vendor payments, ensures proper credit is received, and takes measures to prevent fraud.

10:30Ralph concludes the video by thanking the viewers for watching.