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What is a bill payable?

Author:
Harold Averkamp, CPA, MBA

Definition of Bill Payable

A bill payable is a document which shows the amount owed for goods or services received on credit (meaning not paid at the time that the goods or services were received). The provider of the goods or services is referred to as the supplier or vendor. Hence, a bill payable is also known as an unpaid vendor invoice.

Examples of Bills Payable

Examples of a bill payable include a monthly telephone bill, the monthly bill for the electricity used, a bill for repairs that were completed, the bill for merchandise purchased by a retailer on credit, etc.

Recording a Bill Payable

Under the accrual method of accounting or bookkeeping, a bill payable or unpaid vendor invoice is recorded in Accounts Payable with a credit entry. (The debit will likely be recorded as an expense or asset.) When the bill is paid, Accounts Payable will be reduced with a debit entry, and Cash will be decreased with a credit entry.

The credit balance in Accounts Payable is reported on the company’s balance sheet as a current liability.

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About the Author

Harold Averkamp

For the past 52 years, Harold Averkamp (CPA, MBA) has
worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.

Learn More About Harold

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