What do you understand by Accounts Payable?

Accounts Payable is a process that refers to the money payable by a business company to its suppliers presented as a liability on a company’s balance sheet. It is separate from notes payable liabilities which are debts generated by formal legal papers. When an invoice is vouched for payment, an account payable is recorded in the account payment account book. Once an invoice is approved and recorded in the general ledger or account payable register, it is called vouched and it is termed as an outstanding and open liability since it has not been paid. Payables are often considered as trade payables, payables for buying physical goods that are documented in account and expense payables, payables for the acquisition of goods and services that are expensed. Advertising, entertainment, travel, office supplied and utilities all are common examples of expense payables. Account payable is a system of credit that suppliers propose to their customers by permitting them to pay for a product or service after receiving it and suppliers offer numerous payment terms for an invoice. Payment terms may encompass the offer of a cash discount for paying an invoice within a definite number of days. Account payables are typically bills from the Telephone Company, electric company, cable television or satellite dish service, newspaper subscription and more of such services in households. Householders commonly pay monthly through cheques, internet banking or credit cards. In business companies, there is a much broader range of services in the account payable register.