Accounts Payables | Accounting And Examples

What is accounts payable?

Accounts payable is the balance owed by the entity to its suppliers in respect of purchase of goods and services on credit.

Accounts payables balance is affected by the amount of credit purchase, sales tax, discount received, purchase returns and the payments to suppliers.

As credit purchase results in increase in the expense and liabilities of the entity, expense must be debited while accounts payable must be credited.

Therefore in case of a credit purchase, the following double entry is recorded:


Debit	Purchases (Income Statement)
Credit	Payable

When the payable is paid his due, the payable balance will be reduced to nil. The following double entry is recorded:


Debit	Payable
Credit	Cash/Bank