What is Accounts payable? What is the process and what is included?

1
What is Accounts payable?

• LedgerBench

2
What are Accounts Payable?

• Accounts Payable (AP) is an account that
  represents a companys obligation to pay off its
  debts to its supplies or creditors in a short
  period of time. In a nutshell, it is the amount
  payable by the company to its suppliers or
  creditors. It must be paid within a given period
  to avoid default. It is a short term debt payment
  due to suppliers. The other party records it as
  accounts receivables. 
• If AP increases in the balance sheet under
  liabilities, it means that the company is buying
  more goods or services on credit rather than
  paying cash. And if AP decreases in the balance
  sheet, it represents that the company is paying
  its debts at a faster pace than it is purchasing
  new items on credit. 

3
Recording Accounts Payable

• We are well aware that proper double entry
  bookkeeping requires debit and credit of all
  entries made into the general ledger. Now to
  record AP, the accountant credits accounts
  payable when the bill or invoice is received. The
  debit offset of this entry is to an expense
  account for the goods and service that is
  purchased on credit. After the due amount is
  paid, the accountant debits accounts payable to
  decrease the liability balance. The offsetting
  credit is made to the cash account, which also
  decreases the cash balance.
• Let's take an example here The business gets an
  invoice of 600 for office supplies. The
  accountant will record 600 credit in accounts
  payable and a 600 debit to office supply
  expense. After the company pays the bill, the
  accountant enters a  600 credit to the cash
  account and a debit for 600 to accounts payable. 

4
Why is management of AP important?

• Management of Accounts payable is vital for
  smooth functioning of any business
• It takes charge of paying the vendors on time and
  keeps good and healthy relationships with the
  vendors.
• Once the dues are paid on time, suppliers will
  provide goods on a timely basis and this will
  help smooth flow of the business.
• A good AP intercepts there are no dues, penalty
  for overpayments.
• It enable businesses with proper cash flow
• Accounts payable must be recorded accurately for
  a companys financial statements to be complete
  and accurate. 

5
Accounts Payable Process
Receiving the bill The invoice helps in tracing
the quantity of goods received. Scrutinizing the
bill The name of the vendor, date,
authorization, and requirements raised with the
vendors based on the purchase can be
verified. Updating the records for the
bill Ledger accounts connected to the bills
received need to be updated. The expense entry is
required to be made in the books of
accounts.  Making timely payments As the due
date arrives, payments have to be processed. The
required documents need to be prepared. Once the
payment is made to the vendor, the ledger account
has to be closed in the books of accounts. This
will reduce the liability earlier created.  The
above process may vary company to company. But
this is a basic process. The steps are covered to
avoid frauds and errors.
6
Summary

• Accounts payable is the amount due to be paid to
  vendors or suppliers for the goods or services
  received that has not been paid off
• The sum of all balance amount to be paid to
  vendors are shown on companys balance sheet
• The increase or decrease in Accounts payable from
  the prior period appears on the  cash flow
  statement. 
• Management may choose to pay its outstanding
  bills as close to their due date possible to
  improve the cash flow.

Source - https//ledgerbench.blogspot.com/2020/04/
what-is-accounts-payable.html