1. Payables: Any amount to be paid by the businessman in the future to any person or persons is known as payables, e.g., creditors, bills payable, outstanding expenses, pre-received incomes, etc. are included in payables. All these payables are considered as liabilities. There are two types of liabilities : (1) Current liability and (2) Long-term liability.
Receivables: Any amount to be received by the businessman in the future from any person or persons is known as receivables, e.g., Debtors, bills receivable, outstanding incomes, prepaid expenses, etc. are included in receivables. All these receivables are current assets.
2. Debit and credit are two important words of accounting:
Debit: In Double Entry System the left hand side of an account is known as debit side. The process of writing an amount on the debit side of an account (L.H.S. of writer) with necessary particulars is known as debiting the account. The name of account credited should be written in the column of particulars.
Credit: In Double Entry System the right hand side of an account is known as credit side. The process of writing an amount on the credit side of an account (R.H.S. of writer) with necessary particulars in known as crediting the account. The name of account debited should be written in the column of particulars.
