Account payable

Until that time, the amount is held as an account payable and added to the current liabilities of your business. When an outstanding expense is paid, the payment amount is subtracted from a cash account and removed from the accounts payable.

If a company, for example, purchases $500 in raw materials from its supplier on credit, the company incurs a $500 account payable.

After delivery, sellers issue an invoice, recorded as an account receivable by the seller and an account payable by the buyer.