Accounts Payable — Core Concepts
11 topics covering the full AP cycle from recording purchases to internal controls. Click any card to expand.
Accounts Payable (AP) is a current liability representing amounts a company owes to its suppliers and vendors for goods or services received on credit — not yet paid. It sits on the Balance Sheet under Current Liabilities.
AP vs. Notes Payable
| Feature | Accounts Payable | Notes Payable |
|---|---|---|
| Documentation | Supplier invoice / PO | Formal promissory note |
| Term | 30–90 days typically | Specific maturity date |
| Interest | Interest-free (usually) | Usually bears interest |
| Formality | Informal | Formal legal instrument |
Role in the Operating Cycle
Purchase inventory on credit → sell inventory → collect cash → pay the AP. Managing AP effectively means paying within credit terms (to capture discounts) but not too early (to preserve cash flow). The AP balance represents the company's short-term payment obligations to vendors.
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