Understanding Accounts Payable (AP) With Examples and How to Record AP

Accounts payable (AP) refer to the obligations incurred by a company during its operations that remain due and must be paid in the short term. AP is listed on the balance sheet as a current liability. Proper recording of accounts payable is essential for good bookkeeping. Trade payables and accounts receivable differ from accounts payable in that they represent different types of transactions. The increase or decrease in accounts payable from the prior period is an important aspect of a company's cash flow management. Management may choose to delay payments to vendors to improve cash flow in the short term.
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