What does 'accounts payable' represent?

'Accounts payable' represents a liability on a company's balance sheet that indicates the amount of money a business owes to its suppliers for goods or services that have been purchased on credit. This financial account reflects the obligation to pay these debts within a specified timeframe, typically in the short term.

When a company acquires goods or services and does so without immediate payment, it records this as accounts payable, recognizing it as an obligation that must be settled. This is crucial for managing cash flow and understanding the overall financial health of a business, as it influences working capital and operational liquidity.

The other options do not accurately describe accounts payable. For instance, assets owned by a company refer to resources that provide future economic benefits, which is unrelated to liabilities like accounts payable. Future income expected from sales pertains to revenue potential rather than debts owed. Lastly, liabilities owed to shareholders typically involve different categories, such as dividends or retained earnings, rather than amounts owed to suppliers for procurement. Therefore, the definition that identifies accounts payable as money owed to suppliers is the most accurate and relevant.