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Trade payables

Also called: Payables, Creditors

What are trade payables?

Trade payables is the money the business owes its suppliers.

It is a liability, so it normally has a credit balance.

Nothing touches Bank until the supplier is paid.

Example

A bakery buys flour for £260.00 on credit. Purchases is debited with £260.00 and Trade payables is credited. When the bakery pays, Trade payables is debited with £260.00 and Bank is credited.

Why it matters

A credit balance on Trade payables is money the business still owes its suppliers. It shows how much is still to be paid out.

Practise it

  1. 1Buying and selling on credit8 min, easyFree
  2. How to post to each supplier's account9 min, easyPremium
  3. What goes in the purchases ledger control account10 min, mediumPremium
Practise it nowBuying and selling on credit

Ledger Drill is practice, not tax or accounting advice. If this looks wrong, tell us at [email protected].