I'll try to cover the accounts payable/receivable parts at least. One of the major points of modern bookkeeping is accrual accounting, which means that we recognize economic transactions independently of the cash transaction. Since the economic transaction occurs before the cash transaction, we can't increase the cash balance so we use a short term receivables account. I realize that this explanation isn't great, so I'll try to provide an example.
Consider that you sell a product worth $1000 on the first of January and you issue an invoice to your customer that is due 30 days later (net 30 days). As of January first the economic transaction has taken place and needs to be recorded to stay consistent with the principles of accrual accounting. As we've provided the customer with a product but haven't received payment yet, we've in reality given the customer a short-term loan of $1000 which has to be recorded. Accounts payable is the overview of all of these "short-term loans" given to our customers. The ledger entry for this transaction would increase revenue and also increase this short term loan as shown below.
January 1:
c: revenue $1000 (income statement)
d: accounts receivable $1000 (balance sheet)
Whenever the customer pays for the product we have to update our balance to reflect that the loan has been paid and that the customer no longer has any outstanding debt to us. To do this we credit (decrease) accounts receivable by $1000 and debit (increase) cash on hand by $1000. Note that the second entry doesn't touch the income statement as the revenue has already been recognized.
January 30:
c: accounts receivable $1000
d: cash $1000
The final balance of our accounts at the end of the 30 day period will be:
revenues: $1000 (credit)
accounts receivable: 0
cash: $1000 (debit)
Accounts payable is the same thing, but in reverse. When purchasing from a supplier on netX terms, we've been given a short-term, interest free, loan which we have to record until we pay it. I hope this helps.
Consider that you sell a product worth $1000 on the first of January and you issue an invoice to your customer that is due 30 days later (net 30 days). As of January first the economic transaction has taken place and needs to be recorded to stay consistent with the principles of accrual accounting. As we've provided the customer with a product but haven't received payment yet, we've in reality given the customer a short-term loan of $1000 which has to be recorded. Accounts payable is the overview of all of these "short-term loans" given to our customers. The ledger entry for this transaction would increase revenue and also increase this short term loan as shown below.
January 1:
c: revenue $1000 (income statement)
d: accounts receivable $1000 (balance sheet)
Whenever the customer pays for the product we have to update our balance to reflect that the loan has been paid and that the customer no longer has any outstanding debt to us. To do this we credit (decrease) accounts receivable by $1000 and debit (increase) cash on hand by $1000. Note that the second entry doesn't touch the income statement as the revenue has already been recognized.
January 30:
c: accounts receivable $1000
d: cash $1000
The final balance of our accounts at the end of the 30 day period will be:
revenues: $1000 (credit)
accounts receivable: 0
cash: $1000 (debit)
Accounts payable is the same thing, but in reverse. When purchasing from a supplier on netX terms, we've been given a short-term, interest free, loan which we have to record until we pay it. I hope this helps.