Accounts Payable are a method of recording the moneys owed to other businesses and individuals by a corporation.
Accounts payables can be incurred when business essentials such as inventory are purchased from vendors and received while payment to the vendor has not yet been made. The result is a form of a short term debt to the vendor or person in which money is owed. This short term debt would be recorded on the financial statement as an Accounts Payable, and is considered a Liability of the company. The companies or individuals in which moneys are owed are to be considered creditors of the company and often extend trade credit as a method of increasing and facilitating higher sales to their customers.