Bills payable definition
/What are Bills Payable?
Bills payable refers to the indebtedness of a person or business. The concept is used in the areas of finance and accounting. The term can be defined in three ways, as noted below.
Bills payable can be the funds that a bank borrows from other banks. These are typically due in the very short term and are used to provide liquidity to the receiving bank. Borrowings are generally from a country’s central bank.
Bills payable can be short-term notes issued by a business that are due on demand or by a specific date. The duration of these forms of indebtedness tend to be quite short.
Bills payable can be the same as accounts payable, which are usually comprised of invoices from suppliers that are received and recorded by a business within the current liabilities section of the balance sheet. These liabilities may be recorded as accrued liabilities, if a liability is present as of the end of a reporting period, but no invoice from a supplier has yet been received.
Bills payable is an older term, and is more commonly found in the English system of accounting than the American system.
Bills Payable vs. Accounts Payable
Bills payable refer to the actual invoices sent to you by suppliers for amounts due, while accounts payable refers to the general ledger account in which the obligations associated with these bills is stored. There are usually many bills payable stored within the accounts payable account, while there is only one accounts payable account.
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Terms Similar to Bills Payable
Depending upon usage, bills payable is also known as accounts payable, trade payables, and notes payable.