![]() read more forms part of accounts payable. Example: Swedish gear maker is a vendor to RCOM providing relevant equipment and infrastructure and is classified as an account payable until payments are made for services provided.Ĭontinuing the previous example of account payable, but instead of purchasing the equipment, if we lease it, the payments pending to lessor Lessor A lessor is an individual or entity that leases out an asset such as land, house or machinery to another person or organization for a certain period. Only then will they be able to provide service to many people. So, network providers who have spectrum licenses use these providers to build their infrastructure. Telecommunication equipment is complex and involves innovative technologies. It consists of three components - credit analysis, credit/sales terms and collection policy. The products are supplied to these network providers at a credit period Credit Period Credit period refers to the duration of time that a seller gives the buyer to pay off the amount of the product that he or she purchased from the seller. read moreĪ mobile network provider requires telecommunication equipment and infrastructure. Tickets were booked via MMT on credit for INR 5000īelow are the accounts payable journal entries Accounts Payable Journal Entries Accounts Payable Journal Entries refers to the amount payable accounting entries to the creditors of the company for the purchase of goods or services and are reported under the head current liabilities on the balance sheet and this account debited whenever any payment is been made. Mango traveled to Delhi for an official visit. Mar 09: Paid cash for inventory purchased and services records.Mar 08: Services received on credit from Orange Ltd.Mar 02: Returned damaged goods to supplier worth INR 12000.and paid transportation charges of INR 600. Mar 01: Purchased INR 80000 of inventory on credit from Grapes Ltd.It is because the other company might be an expert, or the manufacturing company does not have the necessary resources or licenses to do a particular work. #3 – Assembling and Subcontracting WorksĪlthough a company has its manufacturing unit, specific processes might still require subcontracting to another company. And in all cases where cash is not immediately paid to settle the services received, Accounts payables are impacted and adjusted for whenever cash is paid. Hence clearing and forwarding agent services will be used. These services will require service providers with some expertise. Also, these goods may be required to be stored at a warehouse in the port. Similarly, goods that must be imported or exported must go through many processes complying with local regulations. So instead of owning these vehicles and incurring expenses of other overheads, it is convenient to use logistics and transportation service providers. So, there may be different modes of transportation (Land, Sea, and Air), and in some cases, more than one mode of transportation might be used. Similarly, goods that are produced need to be taken to the warehouse for storage or directly to the buyer’s place. Raw materials must be taken from the Warehouse of the Supplier to the place of manufacture. Therefore, until the payment is made, the suppliers of raw materials, power, and fuel will appear as Accounts payable. So, these items consumed in large quantities cannot be purchased in cash and hence are bought on credit with a credit period generally of 30 days or more. #3 – Assembling and Subcontracting WorksĮxplanation of Accounts Payable Examples #1 – Raw Materials/Power/ Fuel Purchase for Manufacturing CompaniesĪ manufacturing company needs raw material, power, and fuel to complete the process of manufacturing and production.#1 – Raw Materials/Power/ Fuel Purchase for Manufacturing Companies.Explanation of Accounts Payable Examples. ![]() Let us now discuss each one of them in detail – Source: Accounts Payable Examples ()īelow is the list of Accounts Payable Examples – You are free to use this image on your website, templates, etc, Please provide us with an attribution link How to Provide Attribution? Article Link to be Hyperlinked Instead, each example states the topic, the relevant reasons, and additional comments. Since there are hundreds of such payables, it is impossible to give a complete set of examples that address every variation in every situation. The following Accounts Payable example outlines the most common Accounts Payables on the Balance Sheet. Accounts payable show the balance that has not yet been paid to the associated individual to complete the transaction. Accounts payable include accrued expenses like logistics, licensing, leasing, raw material procurement, and job work.
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