Accounts payable
Accounts payable are the amounts a business owes to suppliers for goods or services received on credit but not yet paid. They appear as a current liability on the balance sheet and are cleared when the invoice is settled.
Also known aspayables · trade creditors
See it move
A timeline labelled 'days payable' begins on 3 April when materials worth €12,000 are received, simultaneously creating an inventory asset and an accounts payable liability of the same amount. The balance remains outstanding for 45 days while the business retains its cash, then the liability is cleared on 18 May when the supplier is paid and cash leaves the bank.
Check yourself
A business purchases €8,000 of raw materials on 60-day credit terms from a supplier. No payment has yet been made. Which journal entry correctly records this transaction?