Since Accounts Payable is a liability account, it should have a credit balance. The credit balance indicates the amount that company or organization owes to its suppliers or vendors.
The Accounts Payable account is credited when goods or services are purchased on credit terms (as opposed to being purchased for cash). Accounts Payable is debited when a payment is made to a supplier or vendor.
Stated another way, a credit to Accounts Payable will increase the balance in Accounts Payable, and a debit to Accounts Payable will decrease the balance.
After working as an accountant, consultant, and university accounting instructor for more
than 25 years, Harold Averkamp formed AccountingCoach.com in 2003. His goal was to
share his knowledge and passion for teaching accounting with people throughout the
world at a very low cost. Read More...