Since Accounts Payable is a liability account, it should have a credit balance. The credit balance indicates the amount that company or organization owes to its suppliers or vendors.

The Accounts Payable account is credited when goods or services are purchased on credit terms (as opposed to being purchased for cash). Accounts Payable is debited when a payment is made to a supplier or vendor.

Stated another way, a credit to Accounts Payable will increase the balance in Accounts Payable, and a debit to Accounts Payable will decrease the balance.

Learn more about Debits and Credits.

About the Author: Harold Averkamp (CPA) has worked as an accountant, consultant, and university accounting instructor for more than 25 years.

He is the creator of the AccountingCoach Pro which has been praised for its ability to simplify accounting in a way that anybody can understand.

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