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Business Definition for: accounts payable
Dictionary of Accounting Terms
accounts payable

obligations to pay for goods or services that have been acquired on open account from suppliers. Accounts payable is a current liability in the balance sheet.

Dictionary of Finance and Investment Terms
accounts payable

amounts owing on open account to creditors for goods and services. Analysts look at the relationship of accounts payable to purchases for indications of sound day-to-day financial management.

See also trade credit
Dictionary of Business Terms
accounts payable

list of debts currently owed by a person or business. These are debts incurred mainly for the purchase of services, inventory, and supplies. The accounts normally do not include accrued salaries payable, accrued interest payable, or rent payable. This list is kept in the ordinary course of the debtor's business.

See also accounts receivable
Related Terms:
trade credit

type of credit extended by one business to another business, allowing the latter to buy goods from the former without making immediate full payment by check or with cash. It is credit obtained through open-account purchases represented by an accounts payable by the buyer and an accounts receivable by the seller. Trade credit is an important external source of working capital for a business, although it can be very expensive. For example, a credit of 2/10 net 30 (2% cash discount if paid within 10 days, otherwise due in 30 days) translates into a 37% annual interest rate if the cash discount is foregone.

accounts receivable

amounts due the company on account from customers who have bought merchandise or received services. Accounts receivable are presented as a current asset in the balance sheet.

Referring Terms:
accounts receivable
debt
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 Copyright © 2006, 2003, 1998, 1995, 1991, 1987, 1985 by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.
 Copyright © 2007, 2000, 1997, 1987, by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.
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