Accounts payable (AP) is the money a business owes to its suppliers or vendors for goods or services it has received but not yet paid for. It is recorded as a liability because it represents cash the business must pay out.
In plain terms
AP is the mirror image of accounts receivable: instead of money owed to you, it is money you owe others.
Example
A firm receives a software subscription invoice; until it is paid, the amount sits in accounts payable.
Why it matters
Tracking payables keeps a firm on top of what it owes and when, protecting relationships and cash flow.
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