Accounts payable and accounts receivable are two fundamental concepts in accounting, each representing different aspects of a company's financial transactions.

Accounts Payable (AP):

Definition: Accounts payable refers to the money a company owes to its suppliers or vendors for goods and services purchased on credit. It represents the company's obligation to pay off short-term debts.
Balance Sheet: It is recorded as a liability on the company's balance sheet.
Nature: It indicates the company's pending payments to external parties.
Example: If a company purchases inventory from a supplier on credit, the amount owed to the supplier is recorded under accounts payable until it is paid off.

Accounts Receivable (AR):

Definition: Accounts receivable refers to the money owed to a company by its customers for goods or services delivered on credit. It represents the company's claim for payment from its customers.
Balance Sheet: It is recorded as an asset on the company's balance sheet.
Nature: It indicates the company's right to receive payments from external parties.
Example: If a company sells products to a customer on credit, the amount the customer owes is recorded under accounts receivable until it is collected.

Key Differences:

Nature: AP involves money the company owes (liability), while AR involves money owed to the company (asset).
Balance Sheet Impact: AP decreases cash flow when paid, while AR increases cash flow when collected.
Transaction Type: AP is related to purchases and expenses, while AR is related to sales and revenue.

Accounts payable and accounts receivable are opposites in terms of financial transactions, reflecting the company's obligations to pay and its rights to receive payments, respectively.