Categoría: Bookkeeping

In this case, the petty cash balance is $70, when it should be $75. This creates a $5 shortage that needs to be replaced from the checking account. Typically, petty cash accounts are reimbursed at a fixed time period. Many small businesses will do this monthly, which ensures that the expenses are recognized within the proper accounting period.

• You would use your petty cash fund to reimburse your employee for the purchase of the supplies.
• The custodian should prepare a voucher for each disbursement and staple any source documents (invoices, receipts, etc.) for expenditures to the petty cash voucher.
• They need to record expenses based on each category and decrease the cash in bank balance.
• Discuss the good and effective internal controls and also discuss areas that need to be addressed where the eatery is vulnerable to losses.
• Usually, these involve paying various parties or receiving cash from them.

In this case, an expense is created that creates a cash overage or shortage. In this case, an expense is created that creates a cash overage or shortage. As cash is spent from a petty cash fund, it is replaced with a receipt of the purchase.

Companies use this system to keep money at hand to meet small needs as they arise. However, companies may also limit how much a customer can pay into this account. However, keeping significant amounts of money at hand can have some risks. As mentioned above, most companies have transferred their money transactions to banks.

Do you own a business?

Cash is hard to secure and impossible to track; it’s very easy for bills to disappear without a trace—even if you’ve established a careful system of receipts or vouchers. In the upper right portion of the window, click the green New button to create a petty cash account. Since Heather is running out of cash, she may ask for replenishment. Before going to the cashier, she should first complete the bottom of the petty cash log.

• Balancing the petty cash account usually occurs when the fund needs to be replenished.
• The transaction will increase expenses and decrease cash at bank.
• Any discrepancies should be quickly addressed with proper documentation.
• If the voucher amounts do not equal the cash needed to replenish the fund, the difference is recorded in an account named cash over and short.

It is recorded in a separated chart account which enables to reconcile daily between accounting record and logbook. It is usually the cash balance that company use for expenses which require immediate payments. If there’s a shortage or overage, a journal line entry is recorded to an over/short account.

In this case, the expense balance decreases, and the year-end balance is the net balance from all overages and shortages during the year. The Cash Over and Short account will be used to balance the entry when the cash needed to get back to the petty cash account does not match the total of petty cash vouchers. Remember, for all journal entries, total debits must equal total credits. To improve the way you handle petty cash accounting, require a petty cash receipt for each transaction. And, create a petty cash slip indicating the amount, employee’s name, and date when you give employees petty cash. When you or employees pay with petty cash, retain the receipt and attach the petty cash slip to the receipt for your records.

Demonstration of Typical Petty Cash Journal Entries

Notice that the petty cash account is debited or credited only when the fund is established or when the size of the fund is increased or decreased, not when the fund is replenished. At the month-end, cashier prepare replenish report and receives cash from bank to refill the petty cash balance. They need to record expenses based on each category and decrease the cash in bank balance. Then, get the total of the Amount column to determine total petty cash expenses. The ending balance is the difference between the beginning balance and the total petty cash expenses.

The transaction will record cash replenish from bank and increase expenses on the income statement. The cash account can be cash at bank or cash on hand, it depends on the source of cash. After review and approval, the cash will transfer from bank to replenish the petty cash balance.

Recording Petty Cash

The responsible person will allow to use the petty cash based on company policy and attached to the proper document. It may require another person to approve the transaction before releasing cash. (Figure)The vice president of finance asks the accounts payable (AP) clerk to write a check in the name of the president for $10,000. He and the president will sign the check (two signatures needed on a check of this size). He further instructs the AP clerk not to disclose this check to her immediate supervisor. Here is another template which also useful for accountants to control their petty cash balance.

Petty Cash Book

It should be noted that the debit to the income statement for the expenses, reduces the net income which reduces the retained earnings and therefore the equity in the business. Review petty cash do’s and don’ts to ensure you correctly handle your fund. Most businesses will reserve enough cash in their fund to meet their monthly needs.

When disbursing cash from the fund, the petty cash custodian prepares a petty cash voucher, which should be signed by the person receiving the funds. A petty cash voucher is a document or form that shows the amount of and reason for a petty cash disbursement. In a simple system, all petty cash expenditures are documented as they happen. The total of these costs is added to the petty cash account monthly, and the monthly amount is entered into the General Ledger as an expense. Finally, surprise petty cash counts should be made to maintain good internal control over the fund. In any given month, a custodian will make various disbursements from the petty cash fund.

Imprest petty cash is the system that company keeps the cash balance on the petty cash account and the transaction will not impact its account again. To maintain internal controls, managers can use a petty cash receipt ((Figure)), which tracks the use of the cash and requires a signature from the manager. The replenishment of funds is an important step in the successful management of resources. It is important that the amount of money in the petty cash fund is closely monitored and that any discrepancies are quickly addressed. It is important to realize that the $80 check will be credited to Cash (the company’s checking account).

Double Entry Bookkeeping

This means that expenses above $50 cannot be charged to petty cash. However, we can also specify that certain expenses are always chargeable to petty cash, even if they’re above $50. To ensure efficient management of resources, the replenishment of money allocated for small purchases must be regularly monitored. Replenishing petty cash is the act of returning a significant what is the maximum validity for a post dated cheque in india amount of cash in the petty cash box to the amount listed in the general ledger account. The custodian of the fund must log all expenses and present receipts as proof of the expense. The custodian is responsible for tracking the total expenses, and when the amount exceeds the amount of the fund, a request for replenishment is made to the finance department.

Direct costs are those in which cost directly related to production or maintenance. On the other hand that part of the product cost which is not sold is called inventory and inventory is shown as an asset in the balance sheet. That part permanent accounts of the product cost which is sold is called the cost of goods sold and the cost of goods sold is charged against revenue as an expense. So, we can say, costs that can be easily attributed to products can be termed as product costs.

• The main difference is that marginal cost represents the additional cost of one extra unit of output, whereas incremental cost represents the additional cost resulting from a group of additional units of output.
• For example, the opportunity cost of working instead of going to school is that you miss out on an education.
• The bearers of such costs can be either particular individuals or society at large.
• If, for example, XYZ company expected to produce 400 widgets in a period but ended up producing 500 widgets, the cost of materials would be higher due to the total quantity produced.
• The contribution margin includes total variable costs, and the gross margin only includes the COGS or the cost of services.

SG&A includes nearly everything that isn’t in the cost of goods sold (COGS). Operating costs include COGS plus all operating expenses, including SG&A. When developing a business plan for a new or existing company, product or project, planners typically make cost estimates in order to assess whether revenues/benefits will cover costs (see cost-benefit analysis).

When You Should Use Costs

As an example, ABC International has designed a product that contains direct material costs of $20.00, direct labor costs of $5.50, and allocated overhead of $8.25. To derive the price of this product, ABC adds together the stated costs to arrive at a total cost of $33.75, and then multiplies this amount by (1 + 0.30) to arrive at the product price of $43.88. These costs are constant even with an increase or decrease in the volume of services/ goods produced or sold. Variable costs, in simple words, are a cost that varies according to the outcome of the output.

In accounting, costs are the monetary value of expenditures for supplies, services, labor, products, equipment and other items purchased for use by a business or other accounting entity. It is the amount denoted on invoices as the price and recorded in book keeping records as an expense or asset cost basis. Cost is typically the expense incurred for creating a product or service a company sells.

• Watch this short video to quickly understand the main concepts covered in this guide, including what variable costs are, the common types of variable costs, the formula, and break-even analysis.
• If you own stock or mutual fund shares that pay you a dividend, and you reinvest that dividend to buy more shares, you’ll need to recalculate your cost basis for each group, or “lot,» of new shares you buy.
• It is the amount denoted on invoices as the price and recorded in book keeping records as an expense or asset cost basis.
• In accounting, the term cost refers to the monetary value of expenditures for services, supplies, raw materials, labor, products, equipment, etc.
• A financial professional will offer guidance based on the information provided and offer a no-obligation call to better understand your situation.

An expense refers to the consumption of assets for the purpose of generating revenue. Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more.

Apple’s total operating costs must be examined over several quarters to get a sense of whether the company is managing its operating costs effectively. Also, investors can monitor operating expenses and cost of goods sold (or cost of sales) separately to determine whether costs are either increasing or decreasing over time. In production, research, retail, and accounting, a cost is the value of money that has been used up to produce something or deliver a service, and hence is not available for use anymore.

Cost is a measurement in monetary terms of the number of resources used for the production of goods or rendering services. For example, Amy is quite concerned about her bakery as the revenue generated from sales are below the total costs of running the bakery. Amy asks for your opinion on whether she should close down the business or not. Additionally, she’s already committed to paying for one year of rent, electricity, and employee salaries. Variable costs are expenses that vary in proportion to the volume of goods or services that a business produces. In other words, they are costs that vary depending on the volume of activity.

If the bicycle manufacturer was trying to choose between making bicycles and skateboards, the opportunity cost of making bicycles would be the revenue they could receive from making skateboards instead. To learn more about fixed, variable, and marginal cost—and other economic theory terms—read the theory of production entry on Britannica. In the concept of cost, the relevant cost concept is greatly useful to get rid of irrelevant information from a particular decision-making process. A direct cost is a cost that is related to the production method of a good or service. The examples listed in this article are fairly straightforward, but calculating cost basis can be complicated. In order to make sure you’re maximizing your tax benefits, consider speaking with a financial advisor or tax advisor.

Difference between fixed cost and variable cost

If you purchased shares through a broker and paid commissions, those costs would be added to your cost basis. So if you bought your 10 shares of XYZ from a broker for $100 per share, and you paid a 1% commission to place that trade, your cost basis would be $1,000 + (1% x $1,000), or $1,010. Most brokerage firms will default to using the FIFO method if you don’t specify how you would like your cost basis calculated. You may benefit from a different method, but it really depends on your specific tax situation. Consult your accountant or tax advisor to determine which method might be best for you. This method can be beneficial if you’re trying to limit the potential tax consequences of the sale.

Direct labor is the costs of wages, salaries, and benefits paid to employees directly involved in the production or delivery of the product or service. Companies may directly trace the payroll costs of specific employees to product lines, though this often entails an allocation process (especially for those employees who may work on different product lines). Direct labor is also included in the cost of goods sold component of cost of revenue. With heightened competition in today’s world, companies are urged to make maximum profits. The company’s decision to maximize earnings relies on the behavior of its costs and revenues.

Fixed costs generally include overhead costs, insurance, security, and equipment. Some companies will list the total cost to make a product under cost of goods sold (COGS) on their financial statements. These costs might include direct materials, such as raw materials, and direct labor for the manufacturing plant. Some costs—like the cost of rent or heavy machinery—don’t change based on how many bicycles are produced. Other costs, like labor and raw materials, can increase or decrease depending on how much is produced.

Based on the Nature of Expenses

The average recipient will see an increase of about $54 per month, according to government estimates. That’s a smaller percentage than last year, because consumer prices have eased, and the COLA is tied to the Bureau of Labor Statistics Consumer Price Index. NEW YORK (AP) — Tens of millions of older Americans will see a modest increase in benefits this January when a new cost-of-living adjustment is added to Social Security payments.

They’ll be able to assess your individual situation to make sure you’re being as efficient as possible from a tax perspective. The cost basis for real estate is generally what you paid at the time of purchase. If you have made capital improvements to your home (that is, an addition or permanent structural change to a property that improves its value), you can add the cost of the improvements to your cost basis. If a company declares Chapter 7 bankruptcy, it ceases to exist, and any shares you owned in that company are likely worthless. However, if a company files Chapter 11, you may receive stock in the reorganized corporation.

Understanding Cost Accounting

Our work has been directly cited by organizations including Entrepreneur, Business Insider, Investopedia, Forbes, CNBC, and many others. We follow strict ethical journalism practices, which includes presenting unbiased information and citing reliable, attributed resources. Cost is the sacrifice made that is usually measured by the resources given up to achieve a particular purpose. Thus, the nature of a cost drives the type of expense to which it is eventually assigned.

As mentioned before, companies have very different structures from one another. There are often other direct costs unique to a specific product line or industry that necessitate inclusion into cost of revenue. As mentioned before, every company’s direct costs and cost of revenue may be calculated differently.

For example, Telephone expenses of which rent portion is fixed and call charges are variable. A cost contains both fixed and variable components and which is thus partly affected by fluctuations in the level of activity. A variable cost changes in direct proportion to a change in the level of activity.

Essentially, if a cost varies depending on the volume of activity, it is a variable cost. To illustrate this, assume a company produces both trinkets and widgets. The trinkets are very labor-intensive and require quite a bit of hands-on effort from the production staff. The production of widgets is automated, and it mostly consists of putting the raw material in a machine and waiting many hours for the finished good. It would not make sense to use machine hours to allocate overhead to both items because the trinkets hardly used any machine hours.

Taken together, the asset account and contra asset account reveal the net amount of fixed assets still remaining. A contra asset account is not classified as an asset, since it does not represent long-term contra revenue value, nor is it classified as a liability, since it does not represent a future obligation. Contra accounts are used to reduce the original account directly, keeping financial accounting records clean.

• Examples of fixed assets include buildings, machinery, office equipment, furniture, vehicles, etc.
• Including contra accounts on a balance sheet is important as it allows for a more transparent view of a company’s financial position.
• For example, if the balance of accumulated depreciation increases from $20,000 to $50,000, this means that the depreciation expense amounts to $30,000, which will be listed in the income statement.
• For example, when the credit amount in allowance for doubtful accounts increases, it is also recorded in the bad debt expense as a debit increase.

Pilot provides bookkeeping, CFO, and tax services for literally thousands of startups and growing businesses. To talk to an expert on our team and find out what Pilot can do for you, please click «Talk to an Expert» below, or email us at The percentage of sales method assumes that a fixed percentage of goods or services sold by a company cannot be received. The main reason is to make the remaining shares more valuable, as their prices are expected to rise after the stock buyback. The auditors aim to keep the balances at their adequate levels, but the controller might want to keep them as low as possible to reduce expenses and maximize profit levels. Learn financial statement modeling, DCF, M&A, LBO, Comps and Excel shortcuts.

Contra liabilities

Better yet, consider investing in AI-powered accounting software to reduce mistakes. It’s normal for businesses to receive refund requests or returns from customers. Charlene Rhinehart is a CPA , CFE, chair of an Illinois CPA Society committee, and has a degree in accounting and finance from DePaul University. Examples of deferred unearned revenue include prepaid subscriptions, rent, insurance or professional service fees.

• A contra account is a general ledger account with a balance that is opposite of the normal balance for that account classification.
• The balance sheet will show a gross fixed assets value, a contra account value for accumulated depreciation, and a net value.
• A contra expense account is an account used to reduce the amount of an expense without changing the balance in the main expense account.
• Companies bury them in the footnotes and often don’t break out the actual calculation.

Some of the most common contra assets include accumulated depreciation, allowance for doubtful accounts, and reserve for obsolete inventory. In bookkeeping, a contra asset account is an asset account in which the natural balance of the account will either be a zero or a credit (negative) balance. The account offsets the balance in the respective asset account that it is paired with on the balance sheet. Let’s consider a fictional example of a small clothing retail business called “StyleMart” to illustrate the use of contra revenue accounts in financial accounting.

Types of Contra Account

We strive to empower readers with the most factual and reliable climate finance information possible to help them make informed decisions. Our goal is to deliver the most understandable and comprehensive explanations of climate and finance topics. Carbon Collective is the first online investment advisor 100% focused on solving climate change. We believe that sustainable investing is not just an important climate solution, but a smart way to invest.

In other words, contra revenue is a deduction from gross revenue, which results in net revenue. The sales allowance shows the discounts given to customers when returning the product. This is done to entice customers to keep products instead of returning them. The most common contra equity account is called “treasury stock.” This special account decreases the number of shares outstanding in the market because the company repurchases some of the shares from its buyers. Therefore, it reduces the value of shareholders’ equity by the amount paid for those repurchased stocks. Note that the contra liability account has a positive balance (a debit balance), and the liability account normally has a credit balance.

The Eight Steps Of The Accounting Cycle

The amount is not reported, and the net sales amount is reported on the income statement. The sales discounts account contains the amount of sales discounts given to customers, which is usually a discount given in exchange for early payments by them. When the original dollar amount is kept in the original account and a separate account is used for recording the deduction, the resulting financial information becomes more transparent and helpful for stakeholders. For example, a building is acquired for $20,000, that $20,000 is recorded on the general ledger while the depreciation of the building is recorded separately.

Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the https://www.bookstime.com/ CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from Loughborough University.

Examples of Contra Revenue Accounts

Excess, stored inventory will near the end of its lifespan at some point and, in turn, result in expired or unsellable goods. In this scenario, a write-down is recorded to the reserve for obsolete inventory. The allowance for doubtful accounts – often called a “bad debt reserve” – would be considered a contra asset since it causes the accounts receivable (A/R) balance to decline. Keep reading to learn more about contra revenue accounts and what should go in them. It is important to realize that unearned revenue is not a contra revenues account.

The offers for financial products you see on our platform come from companies who pay us. The money we make helps us give you access to free credit scores and reports and helps us create our other great tools and educational materials. In accounting and bookkeeping, a credit balance is the ending amount found on the right side of a general ledger account or subsidiary ledger account. Gain on the sale of an asset is an accounting term used to describe the increase in value of a company’s assets.

When I used to carry a balance on my cards, I would see how the interest impacted my balance and that I had to pay much more to get the balance down. It becomes a cycle of interest accruing on a balance and the payment you make not really reducing the total debt because of that interest. Accounts receivable is created when a company provides goods or services and records a sale on its balance sheet. The customer then becomes indebted to the company for the amount of the sale, and this debt is reflected as an account receivable.

• If you have a zero-interest introductory offer, you won’t be charged interest for a specified period of time.
• This is the picture of your outstanding credit card balance at the end of each day.
• Citi offers five cards for balance transfers, each with slightly different repayment terms and intro APRs.
• For example, you may have purchased materials from a vendor, but after receiving the materials, found that they were defective in some way.
• This is the basic principle of short selling—a short seller’s equity will fall when the stock price increases and the equity will rise when prices decrease.

Looking ahead, I would continue to pay interest, compounded daily, until the next time I pay off a statement balance in full. That’s how, over time, carrying a revolving balance can add up to significant interest costs. Believe it or not, there are at least 5 different kinds of credit card balances. Americans carried a balance on 56% of all active credit card accounts in the third quarter of 2022, according to the most recent available data from the American Bankers Association. Then, when the pandemic took hold in 2020, credit card balances plunged again — from $927 billion in the fourth quarter of 2019 to $770 billion in the first quarter of 2021.

Debit Balance in a Bank Account

This means that if a product is sold today but won’t be delivered until tomorrow, the revenue is still recognized today. On the other hand, some may assume that a credit always increases an account. Monalo’s balance sheet would include an obligation (“liability”) to Matthew for the amount of money on deposit. Thus, Matthew is told that his account is being “credited” when he makes a deposit.

A couple of the cards offer rewards for purchases as well, meaning when you’re done paying off your balance transfer, you can continue to use the card to generate credit card rewards. Most companies are aware that there is always the risk that some of the people owing such money will default in their repayment of the same. The risk is even more so when the people who owe the money are employees of the company due to the fact that they are not often as motivated as customers to pay off the debt. This consideration causes such companies to list outstanding debts from customs and employees differently under an accounts receivable credit balance. Sometimes, an AR credit balance isn’t the result of an error, but a planned move by a company or business entity. For example, if you’re experiencing cash flow problems, you may ask a customer to make a deposit for goods or services to be delivered in the future.

If an investor has $500 in the account, then they can only purchase shares worth $500, inclusive of commission—nothing more, nothing less. Paying your credit card off in full and on time is the best credit card strategy. This may not be something that happens overnight for you especially when it comes to paying the card off in full every month. For me to make this happen, I had to make my credit card payments a priority in my budget. Common Stock is an equity security that represents ownership in a corporation.

• For cards accruing interest, the average in the third quarter of 2023 was 22.77%.
• Interest rates can add up when you carry a balance on your credit card each and every month.
• Businesses may receive payment for services that have not yet been rendered, such as an annual subscription to a magazine.
• The process by which this occurs will become clear in the following sections of this chapter.
• The second way to account for unearned revenue is with the cash basis method, which means that you only record the revenue once the service has been provided.

Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Credit reports, credit scores, and credit limits are very different things.

Normal Balances

Prepaid expenses are recorded as an asset on the balance sheet because they represent future benefits that have not yet been used up or expired. The journal entry to record a prepaid expense is a debit to the prepaid expense account and a credit to cash. This second journal entry is a debit to the new expense account and a credit to the prepaid expense account. Accounts payable is a balance sheet account that represents the amount of money a company owes to its suppliers. The account is used to record the purchase of goods and services on credit.

For example, if services are provided to customers for cash, both cash and revenues would increase (a “+/+” outcome). On the other hand, paying an account payable causes a decrease in cash and a decrease in accounts payable (a “-/-” outcome). Finally, the new importance of materiality some transactions are a mixture of increase/decrease effects; using cash to buy land causes cash to decrease and land to increase (a “-/+” outcome). In the previous chapter, the “+/-” nomenclature was used for the various illustrations.

Meanwhile, only Colorado (down 0.3%), California (down 1.7%) and Virginia (down 2.5%) saw their debt averages decrease. Credit cardholders in Connecticut have the highest average credit card debt of any state, according to LendingTree data, while those in Kentucky have the lowest. Then when you pay off those purchases, you’ll earn another 1% cash back.

What is a Debit Balance?

But sometimes you might find it impossible to pay your entire balance on time. In that situation, you’ll want to pay attention to how much you’re spending compared with your credit limit. If you don’t pay your credit card bill on time and in full each month, whatever’s left (the unpaid balance) gets carried over to the next billing cycle. If you carry a balance, you’ll most likely be charged interest on the portion of the balance you didn’t pay based on the annual percentage rate, or APR, of your card. Yes, in addition to credit balances, you may also encounter debit balances.

What Is an Accounts Receivable Credit Balance?

Because the rent payment will be used up in the current period (the month of June) it is considered to be an expense, and Rent Expense is debited. If the payment was made on June 1 for a future month (for example, July) the debit would go to the asset account Prepaid Rent. Whenever cash is received, the asset account Cash is debited and another account will need to be credited. Since the service was performed at the same time as the cash was received, the revenue account Service Revenues is credited, thus increasing its account balance. Revenues and gains are recorded in accounts such as Sales, Service Revenues, Interest Revenues (or Interest Income), and Gain on Sale of Assets.

So, if someone paid you in January for a gym membership that begins in February, you would record the revenue in January using the accrual method. The second way to account for unearned revenue is with the cash basis method, which means that you only record the revenue once the service has been provided. So, in our gym membership example, you would only record the revenue in February when the service begins.

But — again — the hockey stick returned, thanks to a massive spike in the fourth quarter of 2021. A debit balance is a negative cash balance in a checking account with a bank. Alternatively, the bank will increase the account balance to zero via an overdraft arrangement. For example, carrying too high a balance could result in a high credit utilization rate — the percentage of your total credit limit that you’re currently using — which in turn may lower your scores. For businesses that sell physical products, inventory is one of the most important accounts.

The system must be sufficient to fuel the preparation of the financial statements, and be capable of maintaining retrievable documentation for each and every transaction. The previous chapter showed how transactions caused financial statement amounts to change. Perhaps a giant marker board could be set up in the accounting department. As transactions occurred, they would be communicated to the department and the marker board would be updated.

Then, debits and credits are applied to the accounts, utilizing the rules set forth in the preceding paragraphs. In general, paying attention to your credit card balance can help you monitor your spending to remain within budget, avoid interest rate changes, and keep your credit utilization low. Carrying a credit card balance might be necessary at times, but it generally won’t help you build credit. It might end up costing you money if it becomes credit card debt — and that can pull down your credit scores. It’s also important to note that you don’t need to carry a balance to keep a card active. Keeping a card active is important, but there are many ways to do this — and one the simplest is to use your card to automatically pay a small expense that you pay monthly anyway (like your phone bill).

As a business owner, you may find that you have money coming in from customers before you have to pay out for the goods or services they’ve purchased. This is called unearned revenue, and it’s important to know how to account for it properly. Accounts payables are debts of a company to its suppliers incurred during the normal course of business. The total amount owed to suppliers is typically referred to as the accounts payable balance.