Accounts payable is money a company owes to suppliers for goods or services it has already received but has not yet paid for.
Why it matters:
- it is a short-term liability
- it is created by accrual accounting, not by the cash payment itself
Typical sequence:
- receive inventory or services
- record expense or asset and record accounts payable
- pay cash later and remove the payable
Accounts payable is one of the most common current liabilities on the Balance Sheet.