Accounts Payable
Current liabilities representing amounts owed to suppliers for goods and services purchased on credit, typically due within 30-90 days of invoice date.
Accounts Payable
Current liabilities representing amounts owed to suppliers for goods or services purchased on credit that must be paid within a short time period, typically 30 to 90 days.
For example, when a restaurant receives $5,000 worth of food supplies from vendors on credit, it records an accounts payable liability until payment is made, usually within the suppliers’ payment terms.
Effective accounts payable management involves optimizing payment timing to maximize cash flow while maintaining supplier relationships and capturing early payment discounts. The accounts payable turnover ratio measures how quickly a company pays its suppliers, with implications for cash management and creditworthiness.