Accounts payable may be affected by adjustments— decreased by vendor credits, for example, or increased by interest charges on delinquent accounts. The danger isn’t great from inappropriate crediting, but be cautious nonetheless. These adjustments should be treated with as much care as adjustments to accounts receivable. Supporting documentation for any vendor adjustment should be required.

As part of the process, the ACCOUNTS PAYABLE will be recording purchases. Most of that information comes from the vendor invoices, including vendor name, amount, and payment terms. If the invoice doesn’t arrive before close of business at the end of the month, the amount is accrued through adjusting entries to the current period. (That’s where accrual accounting comes in.) The transaction process, whether automated or manual, follows the three steps outlined earlier.