Accounts payable – Current Liabilities

Accounts payable (sometimes called trade accounts payable) are short-term obligations to suppliers for goods and services. The amount in the Accounts Payable account is generally supported by an accounts payable subsidiary ledger, which contains an individual account for each person or company to which money is owed.

Accounts payable represent debts that the firm incurs in purchasing inventories and supplies, as well as amounts that the firm owes for other services used in its operations, such as rentals, utilities, insurance, and so on. Most business transactions with suppliers involve short-term credit, for which payments are due within a designated period, such as 30 or 60 days.

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