If I help you understand what accounts payable means, I guess you’ll owe me one. Did you see what I did there – I am your supplier of answers and if I was charging you for my fantastic service, your accounts payable would include the money you owe me for supplying you with this knowledge.
For example…
Ok, let’s say Top Notch Pizzas bought 2 tonnes of tomatoes from Red Plump Tomato Growers in the month of July at a cost of $1000 on credit. The accounts payable would be recorded as an entry in Top Notch Pizza’s balance sheet as a liability of $1000 to Red Plump Tomato Growers.
