Question

What is an accounts payable?

a. Amounts a customer owes our business from a credit sale where the customer promises to pay later.
b. Amounts our company has already paid to our vendors.
c. Amounts our business is obligated to pay in the future.
d. Amounts our company must return to our vendor if discounts are not granted on our purchases.

Answer 1

An accounts payable refers to amounts our business is obligated to pay in the future. It represents the money that our company owes to its vendors or suppliers for goods or services purchased on credit. Therefore, the correct option is C.

Step-by-step explanation:

An accounts payable refers to amounts our business is obligated to pay in the future. It represents the money that our company owes to its vendors or suppliers for goods or services purchased on credit. Accounts payable are recorded as liabilities on the balance sheet and typically have a specified payment period.

For example, if a company buys inventory from a vendor on credit, the vendor will send an invoice to the company, stating the amount due and the payment terms. Until the payment is made, the amount owed by the company to the vendor is considered an accounts payable.

Keywords: accounts payable, obligations, payment terms