How is 'accounts payable' defined in financial accounting?

Accounts payable is defined as money owed by a business to its suppliers for goods or services that have been received on credit. This indicates a liability on the business’s balance sheet, reflecting obligations to pay these suppliers within a specified timeframe. When a company purchases inventory or takes services from a provider but has not yet made cash payment, this amount is recorded as accounts payable.

This definition underscores the nature of accounts payable as a current liability that is usually expected to be settled in the short term, aligning with the business's cash flow management and operational cycles. By tracking accounts payable, companies can manage their payment commitments and maintain positive supplier relationships.

In contrast, the other options refer to different financial concepts: cash receipts from customers involve revenue recognition; cash on the balance sheet relates to current assets; and revenue that has not been collected pertains to accounts receivable. Each of these represents distinct aspects of financial accounting that do not encapsulate the obligations that accounts payable signifies.