Accounts payable (AP) is an accounting entry that represents an entity’s obligation to pay off a short-term debt to its creditors. On many balance sheets, the accounts payable entry appears under the heading current liabilities. Another common usage of AP refers to a business department or division that is responsible for making payments owed by the company to suppliers and other creditors.
Accounts Payable (AP) Definition | Investopedia. (n.d.). Retrieved from http://www.investopedia.com/terms/a/accountspayable.asp

Here are a few practical examples demonstrating how Accounts Payable (AP) might be applied in business scenarios:

1. Company Balance Sheet
   “On the balance sheet, accounts payable are listed as a current liability, showing the amount the company owes suppliers for goods received but not yet paid for.”
2. Internal Department Responsibilities
   “The accounts payable department is responsible for processing and tracking all payments owed to external suppliers, ensuring that invoices are verified and paid on time.”
3. Managing Cash Flow
   “Effective management of accounts payable can improve a company’s cash flow by allowing businesses to negotiate favorable payment terms with suppliers.”
4. Credit Terms and Accounts Payable
   “By reviewing accounts payable regularly, financial managers ensure that the company isn’t incurring any overdue charges and maintains good credit terms with suppliers.”
5. Accounts Payable Example in Action
   “If a business receives an invoice for office supplies amounting to $500 with a payment term of 30 days, this amount will be recorded as accounts payable on the balance sheet until it is paid.”