The official business definition of Accounts Payable is a liability account that represents the amount of money a company owes to its suppliers for goods and services purchased on credit. It is a current liability account, meaning that the debt must be paid within a year. Accounts Payable is a debit account, meaning that when a company purchases goods or services on credit, the amount is recorded as a debit in the Accounts Payable account. When the company pays the supplier, the amount is recorded as a credit in the Accounts Payable account. The balance in the Accounts Payable account is the total amount of money the company owes to its suppliers. This balance is usually tracked on a company’s balance sheet.
