Money your business owes vendors for bills received but not yet paid.
Accounts payable is the money a business owes its vendors and suppliers — bills that have been received but not yet paid. It sits on the balance sheet as a liability, because it's a claim someone else holds against the business.
A/P is created the moment you record a vendor bill (debit the expense, credit accounts payable) and cleared when you pay it (debit accounts payable, credit cash). Managing it well means paying on time without paying early — unpaid bills are effectively an interest-free loan from your vendors, as long as you never miss a due date.
You receive a $600 invoice from your web designer, due in 30 days. The $600 lands in accounts payable today; when you pay it three weeks later, A/P goes back down and cash goes out. The A/P aging report lists every such bill by how close it is to due.
Accounts Receivable (A/R) · Accrued Expenses · Current Liabilities — or browse the full plain-English glossary.
Reading a definition is the easy part — the Daily Challenge (ten questions a day, free, no signup) is how terms like this become reflexes. Going for certification? Start with the free ProAdvisor readiness check.