Amounts owed to suppliers for goods or services already received, usually recorded as a current liability until paid.
Accounts payable is the liability account used for invoices and other supplier obligations that a business has already incurred but has not yet paid. In practice, it usually covers ordinary trade credit for inventory, services, utilities, freight, and other operating inputs.
Accounts payable sits at the intersection of expense recognition, cash planning, and vendor control. If it is understated, liabilities and expenses may be understated. If it is poorly managed, a business can miss due dates, damage supplier relationships, or distort period-end reporting.
When a supplier invoice is approved, the business records the cost in the proper asset or expense account and credits accounts payable. The balance remains open until payment is issued and applied.
In many systems, the detail lives in an A/P subledger by vendor and invoice, while the general ledger carries the control-account total. Reconciliations between the subledger and the general ledger are part of basic close discipline.
A wholesaler receives $5,000 of inventory on credit:
| Account | Debit | Credit |
|---|---|---|
| Inventory | 5,000 | |
| Accounts Payable | 5,000 |
When the invoice is paid:
| Account | Debit | Credit |
|---|---|---|
| Accounts Payable | 5,000 | |
| Cash | 5,000 |
The first entry recognizes the obligation. The second clears it.
Accounts payable is not the same as accrued expense. Accounts payable usually ties to supplier invoices or matched vendor obligations, while accrued expenses are often recognized before a formal invoice arrives.