Accounting

Accounts payable

money the business owes the suppliers

Accounts receivable

money the customers owe the business

cost of sales

cost of inventory sold

Gross profit

sales - cost of sales

Net profit

Gross profit - Expenses

Accounts payable turnover

measures the average number of days the business takes to pay its suppliers

Accounts receivable turnover

measures the average number of days the customers take to pay the business

slow within credit terms (APTO)

cash stays in own business longer (benefit)

slower outside credit terms (APTO)

leads to suppliers cutting off supply and bad reputation

Faster to reach (APTO)

discount revenue

Too fast (APTO)

less cash on hand

slower within credit terms (ARTO)

lead to a trend where it is difficult to get receipts or bad debts

Faster (ARTO)

use cash to repay Accounts payable

Purchase Invoice

buy inventory on credit

credit note

return inventory

EFT receipt

pay supplier

sales invoice

sell inventory

credit note

customer returns goods

receipt

customer pays

Purchases journal

credit purchases only

sales journal

credit sales only

cash receipt journal

money we received

cash payment journal

money we paid

Purchase invoice credit purchase

business name in middle

sales invoice credit sales

business name on top