📘 Accounts Payable: Common Mistakes Students Make—and What They Mean for Your Business

Accounts payable may seem straightforward: a business receives a bill, records what it owes, and pays the vendor later.

But several common mistakes can cause expenses, liabilities, and cash balances to be reported incorrectly.

These errors are common in accounting classrooms because accounts payable requires students to separate three different events:

1. Receiving the goods or services
2. Recording the obligation
3. Paying the vendor

Those same distinctions matter in real businesses.

Accounts payable should represent valid, unpaid obligations—nothing more and nothing less.

🧾 What Is Accounts Payable?

Accounts payable represents amounts a business currently owes vendors or suppliers for goods or services already received.

For example, a business may receive:

• Inventory
• Office supplies
• Professional services
• Utilities
• Repairs
• Equipment
• Advertising services

If the business does not pay immediately, it records a liability.

A simplified transaction may look like this:

Debit the appropriate asset or expense account
Credit Accounts Payable

When the business later pays the vendor:

Debit Accounts Payable
Credit Cash

The payment reduces the liability. It does not normally create the original expense a second time.

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⚠️ Mistake 1: Waiting Until Payment to Record the Bill

One of the most common mistakes is waiting until cash leaves the bank before recording the purchase or expense.

Suppose a business receives a $1,500 consulting invoice in June but pays it in July.

If the business uses accrual accounting, the June records may need to show:

• Consulting expense of $1,500
• Accounts payable of $1,500

When the bill is paid in July:

• Cash decreases by $1,500
• Accounts payable decreases by $1,500

The expense belongs to June because that is when the service was received.

📊 Why This Matters

Waiting until July to record the transaction may:

• Understate June expenses
• Overstate June profit
• Understate June liabilities
• Overstate July expenses
• Make monthly comparisons less useful

The bank account only shows when cash moved. Accounts payable helps show obligations that already existed before payment.

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⚠️ Mistake 2: Recording the Vendor Payment as a New Expense

Another common error occurs when a bill was entered correctly, but the later payment is recorded as another expense.

Suppose a $900 repair bill was already recorded:

Repair Expense: $900
Accounts Payable: $900

When the business pays the bill, the correct effect is:

Accounts Payable decreases by $900
Cash decreases by $900

If the payment is categorized as another repair expense, the books may show $1,800 of repair expense even though the actual cost was only $900.

🔁 Why This Happens

This mistake often occurs when:

• A bank-feed transaction is categorized instead of matched
• The original bill is forgotten
• The payment is entered manually a second time
• The bookkeeping system is not reviewed before reconciliation

✅ The Key Lesson

The bill records the expense or asset. The payment settles the liability.

Those are two different accounting events.

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⚠️ Mistake 3: Leaving Paid Bills Open

Accounts payable should not include bills that have already been paid.

A bill may remain open when:

• The payment was posted directly to an expense account
• The payment was entered against the wrong vendor
• The payment was not matched to the original bill
• A duplicate bill exists
• A credit or refund was not applied correctly

📉 Why This Matters

Leaving paid bills open may:

• Overstate accounts payable
• Make the business appear to owe more than it does
• Cause duplicate payments
• Distort cash-planning decisions
• Create confusion when reviewing vendor balances

An accounts-payable report should be reviewed regularly to confirm that open bills are still valid.

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⚠️ Mistake 4: Leaving Duplicate Bills in the System

Duplicate vendor bills can occur when:

• The same invoice is entered twice
• A bill is imported and then entered manually
• A revised invoice is entered without removing the original
• Two users enter the same document
• A recurring bill creates an unexpected duplicate

If both bills remain open, accounts payable and expenses may be overstated.

If both are paid, the business may pay the vendor twice.

🔍 What to Review

Before approving payment, compare:

• Vendor name
• Invoice number
• Invoice date
• Amount
• Purchase order
• Supporting documentation
• Payment history

A strong duplicate-review process protects both the financial statements and the business’s cash.

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⚠️ Mistake 5: Recording a Bill Under the Wrong Vendor

A transaction may have the correct amount and still be recorded incorrectly.

For example, a bill from one vendor may accidentally be entered under another vendor with a similar name.

This can cause:

• Incorrect vendor balances
• Confusing payment histories
• Duplicate-payment risk
• Difficulty reconciling vendor statements
• Problems locating supporting documents

Accurate vendor records are an important part of reliable accounts payable.

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⚠️ Mistake 6: Using the Wrong Account

The other side of an accounts-payable entry must also be classified correctly.

A vendor bill could relate to:

• Inventory
• Repairs
• Office supplies
• Advertising
• Equipment
• Prepaid expenses
• Professional services
• Loan-related costs

Posting every vendor bill to a general expense account may produce misleading reports.

For example, purchasing equipment is not the same as purchasing office supplies. Buying inventory is not the same as recording Cost of Goods Sold.

The nature of the purchase determines the appropriate classification.

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⚠️ Mistake 7: Ignoring Vendor Credits and Refunds

A vendor may issue a credit because of:

• Returned merchandise
• Damaged goods
• Pricing corrections
• Duplicate charges
• Service adjustments
• Overpayments

If the credit is not recorded and applied, accounts payable may remain too high.

The business may also pay more than it actually owes.

Vendor credits should be entered, supported, and applied to the appropriate bill or vendor balance.

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⚠️ Mistake 8: Recording Disputed Bills as Valid Obligations Without Review

Not every invoice received is automatically correct.

A business may dispute:

• The quantity billed
• The price
• The service performed
• The delivery
• The contract terms
• A duplicate charge
• An unauthorized purchase

The bill should not simply remain unresolved indefinitely.

The business should document the dispute, communicate with the vendor, and determine the appropriate accounting treatment.

Accounts payable should reflect obligations the business reasonably expects to pay.

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⚠️ Mistake 9: Failing to Review the Accounts-Payable Aging Report

The accounts-payable aging report organizes unpaid bills by how long they have been outstanding.

It may include categories such as:

• Current
• 1–30 days overdue
• 31–60 days overdue
• 61–90 days overdue
• More than 90 days overdue

This report can help identify:

• Bills approaching their due dates
• Old unpaid obligations
• Duplicate or invalid bills
• Vendor disputes
• Payments that were not applied correctly
• Cash-flow pressure

An aging report should not be treated as merely a list of bills. It is a management tool.

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🏦 A Step-by-Step Example

Suppose a business receives a $2,000 inventory shipment on August 5 and agrees to pay the supplier in 30 days.

Step 1: Record the inventory purchase

The business records:

Inventory: +$2,000
Accounts Payable: +$2,000

The inventory is now an asset, and the business owes the supplier.

Step 2: Pay the vendor

On September 4, the business pays the $2,000 invoice.

The business records:

Accounts Payable: −$2,000
Cash: −$2,000

The payment settles the liability.

It does not create another inventory purchase or another expense.

Step 3: Review the vendor account

After payment, the original bill should no longer appear as open.

If it remains on the aging report, the payment may have been recorded incorrectly or not applied to the bill.

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💻 How Bookkeeping Software Can Help

Cloud accounting software such as Xero can help organize:

• Vendor bills
• Due dates
• Accounts-payable aging
• Payments
• Credits
• Supporting documents
• Bank-feed matching
• Reconciliations
• Vendor histories

However, software does not eliminate the need for review.

A bill can be entered into the system and still be:

• Duplicated
• Misclassified
• Assigned to the wrong vendor
• Paid incorrectly
• Left open after payment
• Missing documentation

Good software improves the workflow. Accurate bookkeeping makes the information reliable.

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📊 What Accounts Payable Tells a Business Owner

Accurate accounts payable records help answer questions such as:

• How much does the business currently owe?
• Which vendors need to be paid soon?
• Are any bills overdue?
• Are there duplicate or disputed invoices?
• How much cash will be needed in the coming weeks?
• Are expenses and liabilities recorded in the correct periods?
• Have vendor payments been applied properly?

Accounts payable provides information that a bank balance alone cannot show.

A business may have cash in the bank while also having significant unpaid obligations.

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✅ Practical Business-Owner Takeaway

Accounts payable should provide a reliable picture of valid, unpaid obligations.

Missing bills can understate liabilities. Duplicate or settled bills can overstate expenses or amounts owed.

A strong accounts-payable process should include:

✅ Timely bill entry
✅ Correct classification
✅ Supporting documentation
✅ Duplicate review
✅ Proper payment matching
✅ Vendor-credit review
✅ Regular aging-report review
✅ Reconciliation

These steps help produce clearer reports and reduce the risk of missed or duplicate payments.

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🧭 Professional Bookkeeping Support

Accurate accounts payable depends on properly recorded vendor bills, payments, credits, reconciliations, and supporting documentation.

Visit TheAccountingDr.com to learn about professional bookkeeping support.

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👨‍🏫 About the Author

Dr. Brian Routh is an accounting professor and professional bookkeeper who helps business owners gain financial clarity through professional bookkeeping. He is the founder of TheAccountingDr, a former North Carolina Assistant State Auditor, and a Xero Certified Professional.

Clarity Comes Before Decisions.

📘 Accounts Payable, Inventory, and Cost of Goods Sold: A Step-by-Step Example

A business may: 

1) buy inventory today, 

2) pay the vendor later, and 

3) sell that inventory sometime after that.

Those three events do not all create an expense at the same time.

That distinction is important because inventory, accounts payable, cash, revenue, and cost of goods sold each tell a different part of the financial story.

A simple way to understand the process is to follow the inventory from purchase to payment to sale.

🛒 Step 1: The Business Buys Inventory on Account

Suppose a business purchases $1,200 of inventory from a supplier and agrees to pay the bill next month.

At the time of purchase, the business receives inventory but has not yet paid cash.

The accounting records would reflect:

• Inventory increases by $1,200.
• Accounts payable increases by $1,200.

The business now owns more inventory, but it also owes the supplier.

The simplified entry

Debit Inventory: $1,200
          Credit Accounts Payable: $1,200

At this point, the $1,200 is generally recorded as an asset—not as an expense.

Why?

Because the inventory has not yet been sold. The business still expects that inventory to help generate future revenue.

📦 Inventory Is an Asset Until It Is Sold

One of the most common mistakes is treating inventory as an immediate expense when it is purchased.

For a business using a perpetual inventory system, inventory generally remains on the balance sheet as an asset until the related goods are sold.

That means buying inventory does not automatically create cost of goods sold.

The purchase changes the composition of the business’s financial position:

• The business has more inventory.
• The business has a larger obligation to the supplier.
• No cash has moved yet.
• No inventory expense has been recognized yet.

This is why the balance sheet and income statement must be understood together.

💳 Step 2: The Business Pays the Vendor Later

Suppose the business pays the $1,200 supplier bill the following month.

The payment reduces both cash and accounts payable.

The accounting records would reflect:

• Cash decreases by $1,200.
• Accounts payable decreases by $1,200.

The simplified entry

Debit Accounts Payable: $1,200
          Credit Cash: $1,200

The payment settles the liability.

It does not create a new inventory purchase, and it does not create a second expense.

The inventory is still recorded as an asset until it is sold.

⚠️ Payment Is Not the Same as Expense Recognition

Another common mistake is assuming that an expense occurs whenever cash is paid.

In this example, the cash payment relates to an obligation that was already recorded when the inventory was purchased.

When the supplier is paid:

• The liability is removed.
• Cash is reduced.
• Inventory remains unchanged.
• Cost of goods sold is not recorded merely because payment occurred.

This is one reason bank activity alone does not provide a complete picture of business performance.

The bank account shows when cash moved. The accounting records should also show why it moved and what obligation or asset was involved.

🧾 Step 3: The Business Sells Part of the Inventory

Now suppose the business sells inventory to a customer for $1,000.

Assume the portion of inventory sold originally cost the business $600.

This sale creates two separate accounting effects.

Effect 1: Record the sale

If the customer pays immediately:

Debit Cash: $1,000
          Credit Sales Revenue: $1,000

The business records $1,000 of revenue.

Effect 2: Record the cost of the inventory sold

The inventory that was sold is no longer an asset owned by the business.

Its $600 cost is moved from inventory to Cost of Goods Sold, commonly abbreviated CGS or COGS.

Debit CGS: $600
          Credit Inventory: $600

This second entry records the actual expense associated with the products sold.

📊 Why Cost of Goods Sold Is Recorded at the Time of Sale

Cost of goods sold represents the cost of the inventory that generated the related sales revenue.

Before the sale, the inventory is an asset.

After the sale, that inventory has been used to generate revenue, so its cost becomes an expense.

This is an application of the matching concept: the cost of the inventory is recognized in the same period as the related sales revenue.

In this example:

• Sales revenue is $1,000.
• Cost of goods sold is $600.
• Gross profit is $400.

The simplified calculation is:

Sales Revenue − Cost of Goods Sold = Gross Profit
$1,000 − $600 = $400

Gross profit is not the same as net profit. Other operating expenses still need to be considered.

🧮 The Full Step-by-Step Flow

Here is the complete sequence.

1️⃣ Buy inventory on account

• Inventory increases by $1,200.
• Accounts payable increases by $1,200.
• No cash is paid.
• No cost of goods sold is recorded.

2️⃣ Pay the supplier

• Cash decreases by $1,200.
• Accounts payable decreases by $1,200.
• Inventory remains on the balance sheet.
• No new expense is created by the payment.

3️⃣ Sell inventory that cost $600 for $1,000

• Cash or accounts receivable increases by $1,000.
• Sales revenue increases by $1,000.
• Cost of goods sold increases by $600.
• Inventory decreases by $600.

4️⃣ Determine what remains

The business originally purchased $1,200 of inventory.

After selling inventory that cost $600:

Remaining Inventory = $1,200 − $600 = $600

The balance sheet would still show $600 of inventory, assuming no other purchases, sales, losses, or adjustments.

📈 What Appears on the Financial Statements?

These transactions affect both the balance sheet and income statement.

Balance sheet

The balance sheet may show:

• Remaining inventory of $600
• Reduced cash after paying the supplier
• No remaining accounts payable from this purchase, assuming the entire bill was paid

Income statement

The income statement may show:

• Sales revenue of $1,000
• Cost of goods sold of $600
• Gross profit of $400

The statements are connected.

The balance sheet shows the inventory still owned. The income statement shows the cost of the inventory already sold.

🔍 Why This Matters for Business Owners

This process helps explain several important business questions:

• How much inventory does the business still own?
• How much does the business owe suppliers?
• Has inventory been paid for?
• Which inventory costs belong on the balance sheet?
• Which inventory costs belong on the income statement?
• How much gross profit is being earned on product sales?
• Are purchases being recorded twice?
• Are supplier payments being incorrectly recorded as expenses?

Without accurate inventory and accounts-payable records, gross profit and financial position may be misstated.

⚠️ Common Bookkeeping Mistakes

Recording inventory purchases directly as cost of goods sold

This can overstate expenses before the inventory is sold and understate assets.

Recording the vendor payment as another expense

This duplicates the effect of the original purchase and may overstate expenses.

Failing to reduce inventory when products are sold

This can overstate inventory and understate cost of goods sold.

Recording revenue without recording cost of goods sold

This may overstate gross profit.

Using the selling price as the inventory cost

Cost of goods sold should reflect the cost assigned to the inventory sold, not the amount charged to the customer.

Failing to reconcile inventory records

Inventory quantities, product records, purchases, sales, and the general ledger should be reviewed for consistency.

💻 How Bookkeeping Software Can Help

Cloud accounting software such as Xero can help organize:

• Supplier bills
• Accounts payable
• Payments
• Inventory purchases
• Sales
• Product activity
• Financial reports
• Account reconciliations

However, software does not remove the need for careful setup and review.

The bookkeeping system must distinguish among:

• Inventory purchases
• Operating expenses
• Supplier payments
• Sales revenue
• Cost of goods sold
• Remaining inventory

If those transactions are classified incorrectly, the reports may look complete while still being misleading.

🧭 A Note About Inventory Methods

The exact calculation of inventory and cost of goods sold can depend on the inventory method and the way the business tracks product activity.

Businesses may use methods such as:

• Specific identification
• First-in, first-out
• Weighted average

This article uses a simplified example to explain the basic accounting flow. The appropriate method and system should match the nature of the business and its records.

✅ Practical Business-Owner Takeaway

Buying inventory, paying for inventory, and expensing inventory are three different events.

Inventory is generally recorded as an asset when purchased, accounts payable is reduced when the vendor is paid, and cost of goods sold is recognized when the inventory is sold.

Understanding that sequence helps business owners interpret inventory balances, supplier obligations, gross profit, and cash activity more accurately.

🧭 Professional Bookkeeping Support

Accurate product-sales bookkeeping requires properly recorded inventory purchases, supplier bills, payments, sales, cost of goods sold, reconciliations, and supporting documentation.

Visit TheAccountingDr.com to learn about professional bookkeeping support, including inventory and product-sales bookkeeping.

👨‍🏫 About the Author

Dr. Brian Routh is an accounting professor and professional bookkeeper who helps business owners gain financial clarity through professional bookkeeping. He is the founder of TheAccountingDr, a former North Carolina Assistant State Auditor, and a Xero Certified Professional.

Remember... Clarity Comes Before Decisions.

📘 Accrual Accounting: Common Mistakes Students Make—and What They Mean for Your Business

Accrual accounting is one of the most important concepts in financial reporting, but it is also one of the easiest to misunderstand.

The most common mistake is assuming that accounting follows the movement of cash.

Under accrual accounting, however, the central question is not:

When did the cash move?

The better question is:

When was the revenue earned, or when was the expense incurred?

That distinction affects reported profit, accounts receivable, accounts payable, customer deposits, and the overall usefulness of a business’s financial reports.

🧭 What Is Accrual Accounting?

Accrual accounting records business activity in the period in which it occurs, even when the related cash is received or paid in a different period.

In general:

• Revenue is recorded when it is earned.
• Expenses are recorded when they are incurred.
• Amounts owed by customers may be recorded as accounts receivable.
• Amounts owed to vendors may be recorded as accounts payable.
• Customer payments received before the work is completed may initially be recorded as liabilities rather than revenue.

This approach helps connect financial results to the business activity that produced them.

💵 Accrual Accounting Is Not the Same as Cash Accounting

Under cash-basis accounting, revenue and expenses generally follow cash receipts and cash payments.

Under accrual accounting, the timing may be different.

Consider a business that completes a $2,000 service on March 28 but receives payment on April 10.

Under accrual accounting:

• The revenue relates to March because that is when it was earned.
• The cash is received in April.
• Accounts receivable may be recorded at the end of March until the customer pays.

The business earned the revenue before receiving the cash.

That is the type of timing distinction students—and business owners—often overlook.

⚠️ Common Mistake 1: Recording Revenue Only When the Customer Pays

One common error is waiting until cash is received before recording revenue.

That may be appropriate under cash-basis accounting, but it may be incorrect under accrual accounting.

Suppose a consulting business completes a project in June and sends the customer an invoice for $5,000. The customer pays in July.

Under accrual accounting, the June records may show:

• Revenue of $5,000
• Accounts receivable of $5,000

When the customer pays in July:

• Cash increases
• Accounts receivable decreases

The July payment does not create new revenue because the revenue was already recognized when the work was completed.

📊 Why This Matters

If the revenue is delayed until July, the financial reports may:

• Understate June revenue
• Understate June profit
• Omit the amount owed by the customer
• Overstate July revenue
• Distort comparisons between periods

The timing error does not merely affect one account. It can change the story the financial statements tell.

⚠️ Common Mistake 2: Recording an Expense Only When Cash Is Paid

Another common mistake is recording an expense only when the business pays the bill.

Under accrual accounting, an expense may need to be recognized before the cash payment occurs.

Suppose a business receives a $1,200 utility bill for services used in December but pays the bill in January.

Under accrual accounting, the December records may show:

• Utility expense of $1,200
• A liability of $1,200

When the bill is paid in January:

• Cash decreases
• The liability decreases

The January payment settles the obligation. It does not create a new January expense.

📉 Why This Matters

Waiting until January to record the expense may:

• Understate December expenses
• Overstate December profit
• Omit a liability at year-end
• Overstate January expenses
• Make monthly comparisons less meaningful

Accrual accounting places the expense in the period that received the benefit.

⚠️ Common Mistake 3: Treating Customer Deposits as Immediate Revenue

A customer payment does not always create immediate revenue.

Suppose a customer pays $3,000 in advance for work that will be completed next month.

At the time of payment:

• Cash increases
• The business may also have an obligation to perform the work

Until the revenue is earned, the payment may be recorded as a liability, sometimes described as unearned revenue or deferred revenue.

As the work is completed, the amount can be recognized as revenue.

🧾 Why This Matters

Recording the entire deposit as revenue immediately may:

• Overstate current-period revenue
• Overstate profit
• Understate liabilities
• Misrepresent how much work remains to be performed

The business has received cash, but it may still owe the customer a product or service.

⚠️ Common Mistake 4: Confusing Accounts Receivable with Revenue

Accounts receivable and revenue are related, but they are not the same thing.

Revenue reflects what the business has earned.

Accounts receivable reflects an amount the customer still owes.

When a business earns $4,000 and invoices the customer:

• Revenue may increase by $4,000.
• Accounts receivable may increase by $4,000.

When the customer pays:

• Cash increases.
• Accounts receivable decreases.

Revenue does not increase again.

Recording revenue a second time when the customer pays would duplicate the income.

⚠️ Common Mistake 5: Confusing Accounts Payable with an Expense

Accounts payable and expenses are also related, but they are different.

An expense reflects the cost incurred by the business.

Accounts payable reflects an unpaid obligation.

When a business receives a $900 bill for services already provided:

• The expense may increase by $900.
• Accounts payable may increase by $900.

When the bill is paid:

• Cash decreases.
• Accounts payable decreases.

The payment does not create a second expense.

🔄 Common Mistake 6: Ignoring the Matching of Revenue and Expenses

Accrual accounting is designed to connect revenue with the costs related to earning that revenue.

For example, suppose a business earns revenue from a project in September but delays recording the related subcontractor expense until October, when the invoice is paid.

The September profit may appear too high, while October profit may appear too low.

When revenue and related expenses are recorded in different periods without proper reason, the financial reports can become misleading.

📈 Why This Matters for Business Owners

A business owner may use monthly reports to evaluate:

• Profitability
• Pricing
• Staffing
• Spending
• Project performance
• Cash needs
• Growth decisions

If revenue and expenses are recorded in the wrong periods, those decisions may be based on distorted results.

🏦 Common Mistake 7: Assuming Profit Equals Cash

Accrual accounting helps explain why a profitable business may still experience cash-flow pressure.

A business may report revenue that customers have not yet paid.

At the same time, the business may need cash to pay employees, vendors, rent, loans, and other obligations.

For example:

• Revenue may be recognized today.
• The customer may pay 30 days later.
• Expenses may need to be paid before the customer pays.

The income statement may show profit while the bank account remains tight.

That does not automatically mean the reports are wrong. It may reflect the difference between earning revenue and collecting cash.

💻 How Bookkeeping Software Helps

Cloud accounting software such as Xero can help organize accrual accounting information through features involving:

• Customer invoices
• Accounts receivable
• Vendor bills
• Accounts payable
• Bank feeds
• Reconciliations
• Financial reports
• Customer payments received in advance

However, software does not determine the proper accounting treatment by itself in every situation.

Transactions still require:

✅ Correct dates
✅ Appropriate account classifications
✅ Review of supporting documentation
✅ Proper matching
✅ Reconciliation
✅ Professional judgment

Good software improves the process. Accurate bookkeeping determines whether the resulting reports are meaningful.

📊 A Step-by-Step Business Example

Suppose a business completes a $6,000 project in May.

The customer pays a $2,000 deposit in April and pays the remaining $4,000 in June.

The timing of cash is:

• April: $2,000 received
• May: no additional cash received
• June: $4,000 received

But the revenue is earned in May when the project is completed.

A simplified accrual view could be:

April

• Cash increases by $2,000.
• A liability for the customer deposit may increase by $2,000.

May

• Revenue of $6,000 is recognized.
• The $2,000 deposit liability is reduced.
• Accounts receivable of $4,000 may be recorded.

June

• Cash increases by $4,000.
• Accounts receivable decreases by $4,000.

The business receives cash in two different months, but the revenue relates to the month in which it was earned.

That is the central logic of accrual accounting.

🔍 What This Means for Your Business

Accrual accounting can provide a more complete view of business activity because it records:

• Revenue that has been earned but not yet collected
• Expenses that have been incurred but not yet paid
• Amounts customers owe
• Amounts the business owes
• Customer payments received before revenue is earned

This can help business owners better understand financial performance and financial position.

However, accrual accounting also requires careful attention to timing.

A transaction can be recorded for the correct amount but still be posted in the wrong period.

✅ Practical Business-Owner Takeaway

The most important lesson is simple:

Accrual accounting follows the economic activity of the business, not merely the movement of cash.

To interpret your reports correctly, ask:

• When was the revenue actually earned?
• When was the expense actually incurred?
• Does a customer still owe the business?
• Does the business still owe a vendor?
• Has cash been received before the work is complete?

Those questions help explain why profit, receivables, payables, and cash balances may not move together.

🧭 Professional Bookkeeping Support

Accurate accrual accounting depends on properly recorded invoices, bills, customer deposits, receivables, payables, reconciliations, and supporting documentation.

Visit TheAccountingDr.com to learn about professional bookkeeping support.

👨‍🏫 About the Author

Dr. Brian Routh is an accounting professor and professional bookkeeper who helps business owners gain financial clarity through professional bookkeeping. He is the founder of TheAccountingDr, a former North Carolina Assistant State Auditor, and a Xero Certified Professional.

Remember... Clarity Comes Before Decisions.