Term of the Day accounts payable

Term of the Day

accounts payable

Money which a company owes to vendors for products and servicespurchased on credit. This item appears on the company’s balance sheet as a current liability, since the expectation is that the liability will be fulfilled in lessthan a year. When accounts payable are paid off, it represents a negative cash flow for the company.

See also: List of Key Accounting Terms and Definitions at InvestorGuide.com.

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Usage Example
Most short term-term debt payments are considered accounts payable and recorded on the balance sheet because the expectation is that they will be paid off in less than a year.