what is accounts payable

Accounts payable (AP) is a short-term debt and a liability on a balance sheet where a business owes money to its vendors/suppliers that have provided the business with goods or services on credit. It is distinct from notes payable liabilities, which are debts created by formal legal instrument documents. AP is considered a current liability that a company received goods or services on credit from vendors. The AP department is responsible for processing and reviewing transactions between the company and its suppliers, ensuring that all outstanding invoices from their suppliers are approved, processed, and paid. The AP process starts with collecting supply requirements from within the organization and seeking quotes from vendors for the items required. In households, accounts payable are ordinarily bills from the electric company, telephone company, cable television or satellite dish service, newspaper subscription, and other such regular services. Householders usually track and pay on a monthly basis by hand using cheques, credit cards, or internet banking.