Answer to Question #169681 in Accounting for Milan

Question

When do you record payables and when not to record payables? (This question i am asking is based on Accrued Liabilities and Payables).

John Doe owns John’s Auto repair. He owns it for 20 years. He owns the property that he is operating out of and he owns the business. What is the difference between the property and the business that he owns. Like what do you mean when he owns both?

Answer 1

Accounts payable is recorded as short liability in balance sheet and is usually due within 30 days. Accounts payable is only recognized when an entity is using accrual basis of accounting or when a bill or invoice has been received. Accounts payable cannot be recorded when using cash basis of accounting or when a bill or invoice has not been received.

The property refers to all recognizable assets used to generate income and business means the name given to his place of work and also registered for same purpose. Owning both property and business means he is a sole proprietor.