Purchases of new inventory are just one small part of the bills that a company has to pay during the month. Your Accounts Payable account can be almost as active as your Cash in Checking account. All costs related to sales plus expenses flow through this account. There are four main functions related to the Accounts Payable account.
• Entering the payables into the accounting system
• Signing checks to pay bills
• Sending out the checks to vendors
• Reconciling the checking account
As a small company, you probably don’t have four people assigned to just handle these functions, and it’s not necessary. You should have a different person responsible for each of these functions, though. You never want the person who enters the bills ...