What is Accounts Payable (AP) ? Meaning, Formula, Accounting, Metrics | maijson GKB.
Image Credit: Canva The term Accounts Payable (AP) describes the sum of money that a company owes its vendors or suppliers for goods and services that have been received but not yet paid for. On the balance sheet of the business, it is a liability. Where to Record Accounts Payable in Financial Accounting? A company logs a transaction in its accounts payable system when it receives products or services on credit. Debiting the appropriate expense account and crediting the accounts payable account are the usual steps in an entry. The company credits cash and debits account payable when it settles the debt. Where do I find Accounts Payable in Financial Statements? Since accounts payable are debts, the business must pay off quickly—typically within a year—they are included in the current liabilities section of the balance sheet. Formula and Performance Metrics Accounts Payable Turnover is calculated as Net credit purchases divided by average accounts payable is how turnover is...