Not always does a company make upfront payments for the material (raw material etc.) it buys, accounts payable is essentially the amount owed by an organization for the purchase of raw materials etc.
Accounts Payable can be found under the “Current Liabilities” heading of the Liabilities section of the balance sheet. It is also commonly referred to as “Payables”. The organizations which give credit are commonly referred to as “Sundry Creditors”.
During the time of making an invoice, such payables are recorded under the ledger head of “Accounts Payable”
Commonly seen accounts payable are for advertising, travel, office supplies etc.
Accounts payable are not only for corporations, they can also be seen in common households. Examples of such payables in households include electricity/telephone bills etc.
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