Accounts Payable
What is accounts payable?
An item on a company’s balance that represents money it owes for goods or services purchased on credit. Accounts payable is considered a current liability because the goods or services will be paid for within one year.
What is the difference between accounts payable and accounts receivable?
If business X adds $1,000 to its accounts payable because it has received a shipment of office stationary along with a bill from business Y, then business Y adds $1,000 to its accounts receivable. Accounts receivable is a counterpart to accounts payable, represting money a company is owed for goods or services that were purchased from it on credit.
Do individuals have accounts payable?
For an individual, any bill for goods or service already received would be a part of accounts payable. For instance, a credit card bill or electric bill for the previous month would be part of the individual’s accounts payable - though usually the term is only thought of in a business accounting context.