What is Accounts Payable? Definition and meaning

Accounts Payable

Definition: Accounts Payable is an accounting transaction that reflects money owed by the firm to entities (typically suppliers) on the purchase of products or services on credit. Includes also expenses (advertising, travel, entertainment, office supplies and utilities).
It is also the name of the department that is looking after the payment of this money.
AP is shown on the balance sheet as a liability.
In most firms, AP is typically processed by matching the received invoice to the packing slip and purchase order, and if all is in order, the invoice is paid. This is referred to as the three-way match.

💡

Learn more about Accounts Payable.

More on accounting and auditing: Accounting Cycle, Accounts Receivable, Accrued Revenue, Amortization, Appreciation, more on accounting and auditing...

You may also like: Full-time MBA, Executive MBA, Executive Education, Online MBA.

MBA Brief offers concise, yet precise definitions of concepts, methods and models as taught in a study Master of Business Administration.

We like to keep things short, and provide links to learn more about your subject.

Add MBA Brief to your desktop / iPad