Accounts Payable

Accounts payable is an account of unpaid debt for goods & services received.  A/P is an obligation that a company or individual is under to pay unpaid bills or invoices to venders or service providers.  Accounts payable is listed as a current liability on the balance sheet.  You can look at A/P as an IOU from you to the creditor. 

Accounts payable is commonly used in another context; to identify a department within a company that is actually responsible for paying vendors for the goods and services that the company has received.  This department will manages the procurement process within an organization by approving expense reports, managing the G/L, and approving purchase orders from vendors.  Some accounts payable department's will also handle the responsibility of managing the accounts receivables.  A/P is a very important function to an organization as they are the first line of defense against fraud.  Additionally, they play a very important role in maintaining solid business relationships by paying their bills, and by doing so, protecting the credit rating of that company as well.