accounts payable

Accounts Payable - AP

1. An accounting entry that represents an entity's obligation to pay cash to its creditors. The accounts payable entry is found on a balance sheet under the heading current liabilities. Accounts payable are often referred to as payables.

2. A business department or division that is responsible for making payments owed by the company to suppliers or other creditors.

Investopedia Commentary

Accounts payable are debts that must be paid off within a given period of time in order to avoid default. Payables are not limited to corporations. At the household level, people are also subject to bill payment for goods or services provided to them by creditors. Think of the phone company, the gas company and the pizza delivery man as types of creditors. Each demands payment for goods or services rendered and must be paid accordingly. If people don't pay their bills, they are considered to be in default.

Related Links

What Is A Cash Flow Statement?
Reading The Balance Sheet
What Are Fundamentals?
Introduction to Fundamental Analysis

See also: Accounts Receivable, Balance Sheet, Creditor, Current Liabilities, Default, Other Current Liabilities, Receivable Turnover Ratio

Also spelled: Payable, payables, payabels, payabelAP

accounts payable

Money a business owes to others. Accounts payable are current liabilities incurred in the normal course of business as a firm purchases goods or services with the understanding that payment is due at a later date. If a firm pays cash for all of its purchases, no accounts payable will appear on that firm's balance sheet.