Trade payable
A trade payable is an amount owed to a supplier for goods or services purchased on credit in the ordinary course of business. It is a particular type of liability, distinct from a bank loan or income tax payable. Supplier statements and the business’s purchase records help establish the balance and identify errors or timing differences.
Worked example
A retailer buys $900 of goods on credit, ignoring sales tax. Under a perpetual inventory system, debit inventory $900 and credit trade payables $900. Paying $400 debits trade payables and credits bank, leaving $500 owed before further adjustments.
Common mistake
Trade payables are recorded from the buyer’s perspective; the supplier records the corresponding trade receivable. Do not confuse either balance with cash already paid or received.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | F1 | Direct | July 2027–August 2028 |
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | K1 | Direct | July 2027–August 2028 |
| CIMA | BA3 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |
Related terms
Also called: trade accounts payable, trade creditors