ACCOUNT PAYABLE Meaning and
Definition
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Account payable is a financial term that refers to a liability owed by a business entity to its suppliers for goods or services received on credit. It represents the amount that a company owes to its creditors or vendors for the purchase of goods or services on a credit basis, creating a short-term debt for the business.
In simpler terms, account payable is an obligation that a company has to pay off to its suppliers or vendors for the goods or services they provided. These payables are recorded by the company when an invoice is received from the supplier or vendor, stating the amount due and the terms of payment. The recorded amount is added to the accounts payable account on the company's balance sheet.
Account payable is a crucial aspect of a company's working capital management as it affects its cash flow. Companies are required to manage their accounts payable efficiently to ensure they meet their payment obligations on time and maintain healthy relationships with their suppliers. Timely payment of account payables also helps in earning discounts and building a favorable credit history with suppliers.
Account payable is classified as a liability on the balance sheet of a company as it represents an obligation to pay off debts within a specified time frame, usually ranging from a few days to several months. It is an integral part of a company's financial statements and provides insights into the company's financial health and ability to meet its payment obligations.
Common Misspellings for ACCOUNT PAYABLE
- zccount payable
- sccount payable
- wccount payable
- qccount payable
- axcount payable
- avcount payable
- afcount payable
- adcount payable
- acxount payable
- acvount payable
- acfount payable
- acdount payable
- acciunt payable
- acckunt payable
- acclunt payable
- accpunt payable
- acc0unt payable
- acc9unt payable
- accoynt payable
- accounyt payable
Etymology of ACCOUNT PAYABLE
The term "accounts payable" does not have a specific etymology as it is a combination of multiple words. "Account" comes from the Old French word "acounter" and the Latin word "computare", which means "to count" or "to reckon". "Payable" comes from the Old French word "paier", meaning "to pay". Therefore, "accounts payable" essentially signifies the amount of money owed or to be paid by a company or individual.
Similar spelling words for ACCOUNT PAYABLE
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