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Definition and Examples of

Accounts Payable (A/P)

Expanded Explanation: Accounts Payable are short-term liabilities representing money a business owes to suppliers or creditors for purchases or services rendered. Proper management of accounts payable involves timely payments to avoid late fees and maintaining good relationships with suppliers, which can lead to better credit terms and pricing.

Potential Issues: Delayed or incorrect accounts payable can damage relationships with suppliers, lead to supply chain disruptions, and incur additional costs through late payment fees or interest charges.

Example: If your landscaping business orders gardening supplies on credit, the amount owed to the supplier is your accounts payable.

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