Accrued Expenses VS Accounts Payable With Similarities

Difference Between Accrued Expenses And Accounts Payable

Accrued Expenses are the expenses payable by the business to outsiders of the business within a year. So, these are incurred over a period of time and continue throughout the accounting period until fully paid by the company. Examples are Accrued Salaries, Accrued Wages, etc. while Accounts Payable are the amounts of debts due from the business to outsiders (Suppliers) usually within one (1) Months but some time it goes to two (2) to three (3) months. These are more shorter period of time as compare to Accrued Expenses.

2. Accounts Payable arise specifically only in case of Purchasing of Merchandise or Goods on Credit / Account from suppliers / vendors of the business, while Accrued Expenses are incurred for all others Expenses except Purchase Of Goods. Examples are Salaries still not paid to employees already delivered services or wages paid to workers for the construction still remains unpaid at end of the current accounting cycle, etc.

3. Accrued Expenses arise as a result of Adjustments for which business still need to make payment in future to outsiders while Accounts Payable is the result of Credit Purchases for which the business is still liable to pay for the unpaid invoices received from the supplier.

Similarities Between Accrued Expenses And Accrued Payable

1. Both are the Current Liabilities and Payable by the business to outsiders.

2. Both of these are necessary, if required, to operate the business operations in order to run Working Capital in effective.

So, Accrued Expenses are payable by the business to outsiders within one year while accounts payable are payable to supplier normally within one month. So, it arises much shorter period of time as compare to Accrued Expenses.