Accounts Payable
Short answer
Accounts payable (often called A/P) is the money a business owes to vendors and suppliers for goods or services purchased on credit. It is a liability on the books until the bills are paid.
Why it matters
Tracking A/P tells you exactly what you owe and when. Without it, bills can be missed, paid late, or paid twice — and the business has no clear picture of upcoming cash needs.
How it works
When a bill is received, it is entered as an accounts payable transaction. When it is paid, the A/P balance is reduced and the cash account is reduced. The running A/P total shows the outstanding bills at any moment.
A simple example
A business receives a $1,200 invoice from a supplier with 30-day terms. It enters the bill as accounts payable, then pays it three weeks later — moving $1,200 from cash to clear the A/P entry.
Related terms
Related service
Monthly Bookkeeping
When you may want help
If bills are piling up unpaid, you are unsure what you owe, or vendors are following up on overdue invoices, organized A/P tracking within monthly bookkeeping can bring this under control.
Written and reviewed by Rachel Armstrong, owner and bookkeeper at Armstrong Quality Financial Services. QuickBooks Online Level 1 ProAdvisor. This entry explains a general concept and is not individualized tax, legal, or investment advice.
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