Which of the following best defines 'accounts payable'?

'Accounts payable' refers specifically to the obligations that a company owes to its suppliers for purchases made on credit. It represents the amount the company needs to pay back for goods and services received but not yet paid for. This aspect of a company’s financial management is crucial, as it directly affects cash flow and working capital management.

When a business buys products or services on credit, it does not immediately pay for them. Instead, the amount owed is recorded as accounts payable on the balance sheet until the payment is made. This is a short-term liability, and managing accounts payable effectively is vital for maintaining good relationships with suppliers and ensuring operational efficiency.

The other options do not accurately describe accounts payable. Money collected from customers is related to accounts receivable, company profits relate to income generated after expenses, and long-term debt refers to loans or obligations that are due after a year or more. Each of these concepts plays a different role in financial accounting, highlighting why the definition of accounts payable is specifically tied to money owed to suppliers.