Account Payable represents amounts the company owes to its regular business creditors from whom it has bought goods or services on open account Advertising expense that will be paid to the advertising agency is Account Payable
Any amount owed as the result of a purchase of goods or services on a credit basis. Although a firm making a purchase issues no written promise of payment, it enters the amount owed as a current liability in its accounts. Companies often incur this type of short-term debt in order to finance their inventories, especially in industries where inventory turnover is rapid. See also account receivable