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Accounts payable |
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WIKI ANALYSIS| This article is part of WikiProject Definitions. Consider editing to improve it. View articles referencing this definition. |
Accounts payable are short term debts that a business owes to creditors for products and services
Accounts payable (also known as "Payables" or AP) reflects debts by a company that have yet to be paid. This may include pending purchase orders, unpaid bills, or services rendered by an outside contractor on which payment is, for some reason, pending.
While accounts payable are listed as a liability on the balance sheet they do not actually affect cash flow as the money has yet to change hands. When accounts payable are paid off, it represents a negative Cash flow for the company. When companies are unable to meet their accounts payable obligations, they are considered to be in default.
Examples
Examples of accounts payables are
- Unpaid invoices
- Bills
- Statements for goods or services rendered by outside contractors, vendors or suppliers
in any kind of business two type of works are happening in general one is reciept s ide on which it is shown how much money has been recieved from sales and other sources, while on the other hand is payment side which shows how much payments are made for purchases and other things. since, all the reciepts, all the money, is not collected at the time of transaction becouse there will always be some people who will not pay you at spot they will pay you after some time, may be end of month, end of certain transaction etc.there for to eliminate the confusion as how many reciepts has been collected and how many are pending, one simple step is done in which you simple make all the recipets as ACCOUNT RECIEVABLE, if some reciepts are colelcted at the spot its deducted from the ACCOUNT RECIEVABLE and the balance of ACCOUNT RECIEVABLE shows a clear picture of how much is to be recieved more.Th similar process goes on with the ACCOUNT PAYABLE, that you may not pay all the bills on spot, you may pay some bills on spot and some at later stage, there for what you do is that you put all of your payments in ACCOUNT PAYABLE, from there those payments which you have amde on spot will be deducted and rest/balance will show the status of amounts that you have to pay and it will appear as ACCOUNT PAYABLE. ahmedjan1974@yahoo.com
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