Question

what are the total cash payments on account mean

Answer 1

The term on account refers to the purchase done on credit. For example: purchase of inventory on account, purchase of supplies on account, purchase of asset on account etc. When on account purchase is made the assets are debited and credit is given to accounts payable. The accounts payable liability has to be paid as per the credit period availed as part of purchase. When payments are made to these vendors it is termed as ‘total cash payment on account’. In other words it is settlement of accounts payable liability or balance.

Total cash payment on account reduces the cash balance and accounts payable balance. The respective ledgers are updated as part of payment to vendors. Accounts payable balance is debited and cash is credited.