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What is the difference between a cash payment and a payment made to a vendor or contractor through AP and why is one better than the other?
The difference between a cash payment and a payment made to a vendor or contractor through Accounts Payable is as follows:
In a cash payment, the company using the services of the vendor immediately recognizes the expense (by increasing the expense account) and hand over the cash to the vendor (by decreasing the cash asset account). For the vendor, they recognize the revenue upon completion (by increasing the revenue account) and move the cash onto their balance sheet (by increasing the cash asset account).
In an accounts payable transaction, the company using the services of the vendor immediately recognizes the expense (by increasing the expense account) and acknowledges the debt (by increasing the accounts payable liability). For the vendor, they recognize the sale (by increasing the revenue account) and acknowledges that the company using their services owes them for the work that they did (by increasing the accounts receivable account).
Time eventually passes for the accounts payable transaction and the company that used the services of the vendor sends payment to the vendor (by decreasing the cash account) and acknowledges that the debt is paid (by reducing the accounts payable liability). The vendor receives payment in the mail (by increasing the cash asset account) and acknowledges that the debt is paid (by reducing the accounts receivable asset).
The key difference is which party is providing the cash flow. For a cash payment, the transaction is best for the vendor because they are receiving cash immediately. For an AP transaction, the service user is better because they held onto cash for some period of time.
What else can I help you with?
Contractor Forms: Invoices?
The most popular of contractor forms, an invoice is the type of document through which a contractor may bill a company or individual for the services that they have provided. Normally, this will list the precise flat-fee rate or hourly rate charges along with the list of services that were provided. Additionally, the invoice will include additional information as far as the terms of payment are concerned. For instance, it may say the recipient needs to pay some amount in some amount of days, and it can also list what methods are acceptable. It is important to note that this form exists because contractors are not employees, which means they do not automatically receive payment from a payroll system. Instead, they are freelance, independent workers. The submitted invoice is required in order to receive payment for a service the contractor has offered. For example, the contractor might bill a client for having provided a service as an electrician, freelance writer, builder or plumber. The information that is included on this contractor form will ultimately depend on the service that they have provided. Typically, it will at least include the name of the business or the name of the contractor along with the phone number and address through which he may be contacted. Some may also include their email address. Often, there will also be company information and contact details for the person who will be paying the invoice. The type of services applied will also affect what entries are on the invoice. For instance, a contractor in the construction business may have entries for labor and supplies on the invoice. Supplies may not be present on a freelance writer invoice, though hourly or flat-rate fees may have blank spots instead. There may also be a blank section for both if the contractor sometimes charges hourly rates but also charges a flat rate. Finally, there may be entries for special fees and tax charges on the contractor form. The contractor invoice will also often include information with regard to when the invoice was generated and at what time the money is due. For example, it could list the date when the contractor created the invoice and at which time the client is required to pay the fee. Additional payment terms may be on the invoice, such as the contractor requiring the invoice be due upon receipt or within a certain number of days.
What is the difference between demand draft and pay order?
A demand draft is a pre paid negotiable instrument, wherein the drawee bank undertakes to make payment in full when the instrument is presented by the payee for payment. The demand draft is made payable at a specified branch of a bank at a specified centre. In order to obtain payment, the beneficiary ha to either present the instrument directly to the branch concerned or have it collected by his bank through the clearing mechanism. A banker's cheque(Pay Order) is another payment instrument which is used by the banks to settle payment obligations on behalf of their customers. This instrument is guaranteed by the bank for its full value and is similar to a demand draft. In practice, these instruments are payable at the branch of issue and are used for payment within the local clearing jurisdiction.
What is meant Payment through bank in business terminology?
Covering letter for bank
What is advance payment of tax?
If you don't have money taken out of your paycheck for taxes, you still need to send money in to cover them. This is done through the payment of estimated taxes.
How long does it take for a transaction to be processed through a payment gateway?
It normally takes about two days for a transaction to be processed through a payment gateway. However, it can take up to 10 days. Sometimes, eCommerce transactions are processed immediately.
Are they a difference between a general contractor and a contractor?
general contractors differ in that they are familiar with all aspects of the building process, from vacant land all the way through the processes to complete a home, office building and so forth. a contractor will and can be hired BY a general contractor to accomplish a certain aspect of the process of construction. general contractors can roughly be compared to a general practitioner. a contractor, to a doctor who only specializes in one area of practice
What is the difference between series and parralal circuit?
difference between series is one pathway through circuit,difference between parralal is more then one pathway through circuit.
What are the benefits of going through an independent contractor?
When working through an independent contractor, as opposed to a corporation or larger entity then an individual, you can be assured a personal relationship with the contractor through the duration of the project. This is usually more difficult in a corporate contracting environment.
When making final payment on a construction contract how do you make sure the contractor doesn't file a lien afterword?
First make sure that you are 100% ready to settle with your contractor. Make sure he completed EVERYTHING that was supposed to be done. Go through your contract line by line before settling with the contractor. Once you make your final payment you have next to no recourse in some states. Now once you have decided that you are happy with the contractors work and have any corrections that they are going to do down in writing and signed by you and the contractor set up your meeting to pay your debt. The contractor should have a release of lien form. When he signs this if is stating that he has been paid in full and holds no interest in your home.
What is the phase difference between the current through the resistor and inductor in an AC circuit?
The phase difference between the current through the resistor and inductor in an AC circuit is 90 degrees.
What is the difference between performance bond and collateral warranties?
CW offers contractual rights to a 3rd party to redress non-performance through the terms of the contact. Performance Bond is a sum held in surety that can be called upon in the event of the contractor not performing in accordance with the contract
What is the difference between a torpedo and a missile?
The difference between a missile and a torpedo is that a torpedo travels in the waters and a missile flys through the air.
What is the difference between through and by with examples?
do u chat by mobile
What is the difference between contributions and expenditures regarding Buckley v Valeo?
expenditures are all about the advocacy of a particular candidate through mediums. The candidate has no knowledge of the advocacy medium until it is dispersed. Contributions involve the direct payment of money.
What is meant by Payment by documents through bank?
Payment by documents through your bank is how you have made your payment. The document could be your check.
What is difference between noting and protesting?
In simple words, the difference between Noting and Protesting: Noting is Recording of Non Payment of the bill expressing the displeasure by competant officials like Notary/Advocate.Protesting is declaring/countering non payment in official form prompting to wage a war through court of law
What is the difference in a cosigner and a guarantor?
A cosigner signs the debt agreement and the lender can demand payment from both the debtor and the cosigner. A guarantor does not sign and the lender needs to go through the debtor before demanding payment from a guarantor.
