Accounts Reconciliations, Payable & Receivable

Reconciliation is an accounting process that uses two sets of records to ensure figures are correct and in agreement. It confirms whether the money leaving an account matches the amount that’s been spent, ensuring the two are balanced at the end of the recording period. Reconciling item between balances from two sources is being compared. These items are stated in an account reconciliation, so that the balance from one source is adjusted by reconciling items to arrive at the balance from the other source.

Account Payable – When a company purchases goods on credit which needs to be paid back in a short period of time, it is known as Accounts Payable. It is treated as a liability and comes under the head ‘current liabilities’. Accounts Payable is a short-term debt payment which needs to be paid to avoid default.
Accounts receivable refers to the outstanding invoices a company has or the money the company is owed from its clients. The phrase refers to accounts a business has a right to receive because it has delivered a product or service. Receivables essentially represent a line of credit extended by a company and due within a period ranging from few days to months or in some cases may be a year.