Definition of Accounts Payable

Accounts payable are the amounts that are owned by a firm to one or more than one of its creditors against the purchase of goods, services, raw material, machinery, etc.

Accounts payable are the labilities of a firm and they are shown as Accounts payable in the balance sheet.


Example of Accounts Payable:

A car manufacturer bought raw material from one of its vendors for $20 million. This amount is payable to the vendor from whom the raw material is purchased and the vendor is called Accounts payable in the books of account of the car manufacturer.

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