Accounting Interactions 1

Introduction: "Life in the Real World"

Welcome everyone! This text is organized differently from the Basic Principles books which lead off studies in Accounting. The idea was inspired by discussions in actual workplaces which never seem to be covered in classical Accounting courses. The first surprise is that basic Accounting courses begin working with a general ledger. But general ledger operations are always reserved for a senior member of management! Most new Accounting employees spend some time learning one of two "entry level" positions: Accounts Payable and Accounts Receivable.

Accounts payable
Accounts Payable is the process of describing activity on an invoice using some system of coded cost categories, then posting the invoice into a computer system where it becomes part of a series of cheques paid out.

The steps of Accounts payable process.

1. Receiving the invoices in legally accepted format. 2. Validate the invoice accuracy and the compliance. 3. Post the invoice in the Book with appropriate cost center(a book can be a system or a manual register) 4. Release the payment after approval of the authority person. 5. Pay the amount to the vendor on due date. 6. Send the remittance advice to the vendor.

Accounts receivable
The other common area new employees begin is in Accounts Receivable. Revenue cheques paying for goods and services are organized by customer, then entered into a computer system which posts the cheque to the customer's account. Someone then reviews that customer's account to determine how much, if any, further revenue is still owed by that customer.