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What is accounts payable?

Harold Averkamp, CPA, MBA

Definition of Accounts Payable

Accounts payable involves the amounts owed by a company to its suppliers (vendors) for goods or services the company received on credit. Accounts payable is also referred to as trade payables.

Examples of Accounts Payable

When someone uses the term accounts payable the person may be referring to any of the following:

  • The section of a company’s accounting department that is responsible for processing vendor invoices and other bills for goods and services that a company received on credit.
  • The title of the current liability account containing the amounts owed for vendor invoices and other bills that have been approved but not yet paid. The normal balance in Accounts Payable is a credit balance.
  • Amounts owed which did not involve a promissory note. If a promissory note is involved, the account Notes Payable will be used instead of Accounts Payable.

If a company owes for goods and services but the amounts are not yet recorded in Accounts Payable as of the end of each accounting period, the amount must be recorded with an adjusting entry. The credit portion of the adjusting entry is likely to be recorded in a separate current liability account such as Accrued Expenses and Liabilities.

To learn more about the various aspects of accounts payable, see our Explanation, Quiz, Q&A, and more.

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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

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