accounts payable
Accounts payable is an accounting term that describes the short-term debt that a company owes to its suppliers or vendors for products or services received before a payment is made, typically less than a year, such as within 30 or 60 days. Accounts payable may be abbreviated to “AP” or “A/P.” Accounts payable may also refer to a business department of a company responsible for organizing payments on such accounts to suppliers. To avoid default, a business must pay off accounts payable within a specific period of time. An increase in accounts payable shows an increase in the goods and/or services purchased using credits rather than cash. As such, adequately managing accounts payable is an important part of a business’ internal control as it is directly relevant to the management of the cash flow of a business entity.
Accounts payable entries are a type of current liability in the business’s general ledger and balance sheet . Once the company pays the account, the items are removed from the balance sheet. Accounts payable can generally be discharged without interest if paid within 30 days, but after 30 days the accounts will usually begin to accrue interest.
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See, e.g. United States v. Richman , 93 F.3d 1085 (2d Cir. 1996)
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See also: account ; accounts receivable
[Last reviewed in February of 2025 by the Wex Definitions Team ]
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