What Are Accounts Payable (AP)?
Accounts payable (AP), or “payables,” refer to a company’s short-term obligations owed to its creditors or suppliers, which have not yet been paid. Payables appear on a company’s balance sheet as a current liability.
Another, less common usage of “AP,” refers to the business department or division that is responsible for making payments owed by the company to suppliers and other creditors.
Accounts payable can be compared with accounts receivable.
Understanding Accounts Payable (AP)
A company’s total accounts payable balance at a specific point in time will appear on its balance sheet under the current liabilities section. Accounts payable are obligations that must be paid off within a given period to avoid default. At the corporate level, AP refers to short-term payments due to suppliers. The payable is essentially a short-term IOU from one business to another business or entity. The other party would record the transaction as an increase to its accounts receivable in the same amount.
