Difference Between Similar Terms and Objects

Difference Between Payable and Expense

Payable vs Expense

All individuals are involved in trade either as a buyer or a seller. Also called commerce; it was initially done by exchanging goods and services directly between two individuals or by barter. Then money was invented as a medium of exchange and then buying through credit was introduced.

This led to the complication of trade and the development of accounting and accounting procedures to help individuals and businesses to properly manage their expenses and, in the case of those who use credit, their payables or their liabilities.

A liability is an individual or entity’s obligation towards another which is derived from past transactions. The liquidation of a liability can result in the transfer of goods or assets and the rendering of services or financial remuneration to the other party. Two types of liabilities are payables and expenses.

A payable refers to a current liability or a current debt that has to be paid according to the terms that both parties have agreed on. Examples are electric, cable, and telephone bills wherein consumers have already used the service and are given a bill to be paid at a later date.

In business, the scope of payables is broader and more complicated. It involves invoices and checks and the keeping of journals wherein all payables are listed. Business owners usually hire accountants and bookkeepers to do the job of balancing their journals for them. For example, a ready-to-wear clothes retailer orders from the manufacturer. The manufacturer will deliver the products to the retailer and issues an invoice with the agreement that the shipped products are to be paid later. The invoice is listed in the payables journal of the retailer.

When a payable is paid, it is included in an individual or an entity’s expenses. Expenses are the payment of money to another individual in exchange for goods and services. When one pays the rent or buys food, medicines, cars, or clothes, he incurs expenses. In business and accounting, an expense refers to the cost, either in cash or valuables, of its effort to generate revenue which is paid to another individual or business entity. It causes the reduction of a business’ assets and the acquisition of a liability.

Business expenses include salaries of employees, payments for utilities, capital assets’ depreciation, interest paid for loans, and payments to suppliers.


1.A payable is a liability or debt that has to be paid by the buyer to the seller on the terms that they have agreed upon while an expense is the payment by an individual or a business entity to another in exchange for goods and services.
2.Payables are those that are still to be paid while expenses are those that have already been paid.
3.Examples of payables are electric bills, telephone bills, and those that are purchased through credit using cards or promissory notes while examples of expenses are payments made to suppliers, rent, cash purchases of food and other items, salaries of employees, interest, and utility payments.

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