Dictionary of all accounting terms
Accounts payable is an account that contains the money that needs to be paid to a company or supplier, but it may also refer to the department responsible for managing this account
Accounts payable is an obligation by the business to pay off a short-term debt to its creditors (suppliers), and it is known as a liability on the business balance sheet. The debt must be paid off within a certain period of time in order to avoid default.
When an invoice is received by the business, accountants or bookkeepers will enter the amount owed in the accounts payable sub-ledger. When that invoice is paid, a credit is entered.