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When the company makes payment to settle the payables, it will debit the accounts payable to clear the liability and credit the cash account as the payment results in the cash outflow from the company.

Recording payments in accounting can otherwise be referred to as accounts payable, which means the total amount a given company owes to companies or suppliers for products or services. Furthermore, the accounts payable balance is reflected in the balance sheet.

Likewise, the company can make the journal entry for issuing check by debiting the accounts payable, asset, or expense account and crediting the bank account. In this journal entry, the credit of the bank account will reduce the total assets on the balance sheet.

Format of the Journal EntryThe accounts into which the debits and credits are to be recorded.The date of the entry.The accounting period in which the journal entry should be recorded.The name of the person recording the entry.Any managerial authorization(s)A unique number to identify the journal entry.More items...?May 17, 2017

On account could refer to payment on account in which payment is made against a certain customer's account without any reference to a specific invoice. Payments on account are often made for purchases on account where the customer has not yet received a bill or invoice.

When a customer submits a payment on an account, your bookkeeper makes a journal entry of the amount and the transaction is considered "paid on account." This simply means the customer has made a payment which goes in the accounts receivable ledger on the full amount owed.

Record any cash payments as a debit in your cash receipts journal like usual. Then, debit the customer's accounts receivable account for any purchase made on credit. In your sales journal, record the total credit entry.