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    nicmel's Avatar
    nicmel Posts: 1, Reputation: 1
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    #1

    May 19, 2015, 08:10 AM
    Basic accounting
    Hello,
    I have a basic accounting question.
    In my balance sheet for 2014 I have € 10.000 in accounts payable.
    When this amount will be shown in my Profit & Loss?
    In 2014 one or in 2015, when the account payable will be actually paid?

    Thank you
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
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    #2

    May 19, 2015, 09:40 AM
    Amounts in accounts payable are not directly shown in an income statement, otherwise known as a profit and loss statement.


    You need to think of the different journal entries involving accounts payable such as your company purchasing equipment on account, which will be a debit to an asset account and a credit to accounts payable. These are both balance sheet accounts. When a company receives an utility bill that will be paid in the future then your journal entry would be a debit to an expense account like phone or water expense and a credit to accounts payable. The expense account is on a profit and loss statement and will reduce your profit. The accounts payable account is on the balance sheet.

    When you pay an accounts payable your journal entry will be a debit to accounts payable and a credit to cash. Both of these accounts are balance sheet accounts and will not appear on a profit and loss statement.

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