What is accounts payable (AP)?

Accounts payable (AP) refers to the obligations incurred by a company during its operations that remain due and must be paid in the short term. As such, AP is listed on the balance sheet as a current liability. Typical payables items include supplier invoices, legal fees, contractor payments, and so on.

What does accounts payable mean?

Accounts Payable refers to a business’s obligations to suppliers and creditors for purchases made on an open account. It specifically refers to any amounts owed expected to be paid within one year or less (usually due in 30 to 60 days). Additionally, Accounts Payable could refer to the department responsible for these expenses.

What is the difference between accounts payable and credit balance?

Accounts payable are the current liabilities that the business shall settle within twelve months. Accounts payable account is credited when the company purchases goods or services on credit. The balance is debited when the company repays a portion of its account payable. Since it is a liability account, it must show a credit balance.