Account receivable

Account receivable is an account in a company’s general ledger that represents the amount of money that the company is owed by its customers or clients for goods or services that have been provided but not yet paid for. An example of accounts receivable includes an electric company that bills its clients after the clients…

Account payable

Account payable is a liability account in a company’s general ledger that represents the amount of money the company owes to its suppliers or vendors for goods or services that have been received but not yet paid for. Account payable is an important component of a company’s working capital management, as it represents a source…

Accrual

Accrual refers to the accounting method of recognizing revenues and expenses when they are earned or incurred, regardless of when the cash is received or paid. This means that revenues are recorded when they are earned, even if the payment for those revenues is not received until a later time, and expenses are recorded when…

Cashflow

Cashflow refers to the movement of cash into and out of a business or individual’s financial accounts. It is a crucial measure of financial health and sustainability, as it reflects a business or individual’s ability to generate cash to cover expenses and meet financial obligations. Positive cash flow occurs when the amount of cash coming…

Invoice

An invoice is a commercial document issued by a seller to a buyer that itemizes the products, goods, or services provided and indicates the amount owed by the buyer. It serves as a formal request for payment and acts as evidence of the transaction between the two parties. Typically, an invoice contains the following information:…