Is Accounts Payable A Revenue Or Not?

Previously, we studied about “Is Accounts Payable An Expense”, but here we are interested in another important and basic Accounting Question that, whether Accounts Payable A Revenue Or Not”?

Then answer to this question is, “No”, because Accounts Payable is the the mount of debt payable by the business to outsiders (Suppliers, Banks, Other Financial Institutions, etc.) of the business while revenue is the price of goods sold or services rendered by the business to customers for Cash or Credit Basis.

According To Accrual Basis of Accounting, “All Expenses and Revenues are recorded whether Cash is received or not”. So, we when revenues are not received by the business, then these are Current Assets For the business. Similarly, when expenses remain unpaid it is a Current Liability and when actually paid for Cash, then these are an Expense for the business.

For Example, the company providing Internet Services are the revenues for the company but due to non rendering the services at the end of Month becomes Accounts Payable for the business so these are recorded as the Current Liability For the Business. But, when services are rendered to the customers on the time specified, then these services become the revenues for the business.

From the above study, we conclude that Accounts Payable are not revenue but a Current Liability for the business.