Anyways, let's consider A/R. We can't really relate to A/P bcos we always pay *our* bills on time, don't we ? :-)
So anyways, let's say we give our customers 30 days to pay.
When we make a sale, the two accounts affected are Sales (an income account) and A/R. A/R is an asset, but it's not liquid, and it's not quite cash.
Then when they come by to pay their bill, dropping off a big bag of twenty-dollar bills, we transfer the amount from A/R to Cash.
The reason we do it in two steps is that we've decided to do our accounting on an accrual basis and not on a cash basis, bcos, well, most of our transactions are not cash, they're obligations.
We report sales in our sales figures as soon as we make them, but if the auditor wants to know about whether we're gonna get stuck with bad debts, we break down those A/R's by how old they are: 0-30 says, 31-60 says, etc. At some point when a particular debt is "written off", like when the cheesing bastards go bankrupt, we dock both A/R and Sales, so we're going back and patching up (or rather, "patching down") the Sales account to show that the Sale was never made good.
We can use the same technique for things that we prepay. If we have to plunk down six months' rent in advance, that is an "accrued asset", and while it put a healthy dent in the Cash account, it does show on the books as an asset. And if we've been collecting payroll taxes from our employees and keeping them in a special bank account, the money's not really ours, so we have a growth in the Cash account on one side, and a growth in an Accrued Liability, namely, Payroll Taxes Payable, on the toher side. When we send the quarterly check to the Feds so that they can make payroll too, our liability drops and so does our Cash account.