What is Accounts Payable

What is accounts payable account? Accounts payable is a liability account and reflects all money that you or your company owes to creditors, vendors, bank loans, etc.

It is reflected as a liability account on the balance sheet because it decreases your total equity.

For example, perhaps you have a computer that is worth $3000. However, you used a credit card to buy that computer and your total credit card debit with interest totals up to $3200. So if that is all the assets and liabilities you have, the $3000 in computer equipment (asset) and $3200 in accounts payable (liability), your total net worth (equity) is negative by $200.

An accounts payable report tells you how much money you owe, who you owe it to and when the money is due.

For tax purposes, accounts payable is only considered if you keep your books on an accrual basis.

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