Final answer:
Payment of an account payable constitutes a cash outflow, reflecting money leaving the business to settle obligations for received goods or services on credit, impacting the company's liquidity and financial statements.
Step-by-step explanation:
The payment of an account payable would classify as a cash outflow. In business accounting, cash outflow refers to money leaving a business. When a company pays off its account payables, it is settling its obligations to suppliers for goods or services that were received on credit.
Therefore, this payment results in money flowing out of the business, and in accounting terms, it is recorded as a cash outflow in the financing activities section of the cash flow statement. This is important because it affects a company's liquidity and is reflected in its financial statements.
The payment of an account payable classifies as a cash outflow. An account payable represents an amount owed by a company to its suppliers or creditors. When the payment is made, it reduces the company's cash balance, resulting in a cash outflow.