Accounts payable is the amount that you owe other companies or vendors for services performed or goods purchased. When you receive an invoice, that amount is automatically included in your accounts payable balance. When you pay that invoice, the amount is transferred to whichever expense account it applies to.

Here's an example:

Let's say you own a painting services company. In March, you purchased supplies and equipment from three different online suppliers. They sent you the products you ordered, and invoices totaling $8,000. The accounts payable balance in your ZipBooks account is now $8,000 because that's money that you owe, but haven't yet paid.

The following week, you pay two of the invoices, which total $6,500. Your accounts payable balance is now $1,500, because the $6,500 has been transferred to your Painting Supplies Expense category.

The remaining $1,500 will continue to be classified as accounts payable until you pay the  vendor what you owe.

For a full glossary of bookkeeping terms, check out our blog.

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