True or False? Accounts payable represents money that is owed to a business.

Question

BlackTom AI · Accepted Answer

Consider the basic definition of accounts payable in financial terms.
Option 1: 'True' — This is incorrect. Accounts payable does not represent money owed to a business; rather, it represents money a business owes to its suppliers or creditors. In other words, it is a liability arising from purchases on credit.
Option 2: 'False' — This is correct in relation to the statement. Accounts payable is a liability item on the balance sheet indicating obligations the company must settle with external parties. By contrast, money owed to the business would be reflected as accounts receivable, which is an asset representing amounts customers owe to the company. Understanding the distinction between liabilities (payables) and assets (receivables) helps clarify why the statement is false.

11:709:448:01 FOOD PROD MGMT FINAL Exam - F25- Dec 18- Requires Respondus LockDown Browser

True or False? Accounts payable represents money that is owed to a business.

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