What is an accounts payable account?

The accounts payable account is a liabilities account and includes the supplier debts of a company as well as their changes.

The Accounts Payable Account

Through selling or purchasing on account, a credit balance is created for one contracting party, while the opposite side has a debt to record. After the payment of the amount, these amounts must be deleted from the accounting. A debtor represents a credit balance towards a third party, a creditor is the debt of the company towards a third party. Typically, this involves supplier debts. The creditors are to be classified in the liabilities section and belong to the short-term external capital. The accounts payable account summarizes all unpaid invoices of the company.

It is in the interest of the company that not only the debtor balances are monitored but also the creditor debts. The reason for this is that it is important for a company to pay invoices on time and thus not jeopardize existing business relationships or prevent new ones.

In summary, it can be noted that the accounts payable account in the balance sheet represents a collective account compiled from individual sub-accounts.