Accounts Payable

Accounts Payable is defined as the balances owed to others for supplies, goods and services that have been purchased on credit.  Accounts payable recognizes the time difference between the company's receipt of the benefit or asset and the payment.  The normal payment term of credit applied to an account payable is 30 to 60 days.

Accounts payable is recorded on the balance sheet as a current liability.  Just like the concept accounts receivable, the use of accounts payable has been one of the factors that contribute to the continuing expansion of the U.S. economy.