This is a standard accounting term most small service business owners don't use every day. It is one of the most common liabilities in a service business.
When your business receives goods or services from a vendor, and you're supposed to pay for those goods or services after receiving an invoice, the amount owed is recorded as an Accounts Payable liability until the balance is paid. Basically, Accounts Payable is an accounting category that tracks the money you owe to other people and businesses.
Accounts Payable normally appears on your business' Balance Sheet when prepared by an accountant or accounting software.
Liability is a legal concept that holds your business—and in some cases, you, the business owner—responsible for the consequences of your business activity.Continue reading...