working · Lesson 2 · 10 min
Bills, expenses, and accounts payable
Enter the bill when it arrives. Pay it later by matching the bank line. That is how AP stays honest.
Dotted words have a reminder. Hover on a computer, tap on a phone.
From earlier
- AP
- QBO
Bill first, pay second
A supplier bill is the purchase-side twin of an invoice. On the bill date: debit expense or asset, credit AP (and tax if recoverable — US sales tax on purchases is usually not a recoverable VAT; it sits in the cost). On the payment date: debit AP, credit bank.
| Account | Debit | Credit |
|---|---|---|
| 6200 Fuel & vehicle | $340.00 | |
| 2000 Accounts payable | $340.00 | |
| Totals | $340.00 | $340.00 |
When there is no bill
A card swipe at the hardware store with a receipt and no terms is a spend-money (Xero) or Expense/Check (QBO). Debit expense, credit bank or credit card. Do not also enter a bill — that would double the cost and create a phantom payable.
Xero Purchases
Purchases → Bills. New Bill: contact, date, due date, line account and tax, Approve. Awaiting Payment is your AP. Purchase orders do not post until billed. Smart Document Capture (native on Xero business plans) extracts a photographed or forwarded bill; Hubdoc still publishes for some workflows. A draft is not in the ledger until you approve it.
QuickBooks equivalent
Expenses → Bills, then Pay bills (or match the withdrawal). Vendor credits are Xero’s payable credit notes. QBO Essentials and above are the tiers that actually have bills; Simple Start expects you to expense as you pay. That is a cash habit, not accrual books.
Check
Choices shuffle each visit. Misses send you back to the section. Look back clears the quiz so you can try again. Practice drills deal a new problem on try-again.
Choose an answer, then check.
This try
You entered a $200 bill and also coded the $200 bank payment to the same expense. The damage is: