Which financial term describes the amounts owed to suppliers?

Which financial term describes the amounts owed to suppliers?

• A. Transaction journal
• B. Invoice
• C. Accounts payable
• D. Accounts receivable

Answer: (C)

In accounting, the amounts a company owes to its suppliers are recorded as a liability called accounts payable. This represents obligations from purchases made on credit, meaning you’ve received goods or services but haven’t paid for them yet. The balance grows when you receive an invoice or accumulate credit from suppliers, and it shrinks when you make payments. This is different from accounts receivable, which are amounts owed to you by customers, and from an invoice, which is the actual request for payment from a supplier. It’s also distinct from a transaction journal, which is a broad record of all financial transactions. So, the term that describes what you owe to suppliers is accounts payable.

In accounting, the amounts a company owes to its suppliers are recorded as a liability called accounts payable. This represents obligations from purchases made on credit, meaning you’ve received goods or services but haven’t paid for them yet. The balance grows when you receive an invoice or accumulate credit from suppliers, and it shrinks when you make payments. This is different from accounts receivable, which are amounts owed to you by customers, and from an invoice, which is the actual request for payment from a supplier. It’s also distinct from a transaction journal, which is a broad record of all financial transactions. So, the term that describes what you owe to suppliers is accounts payable.