Accounts payable refers to the total amount of money that a company owes its creditors for materials and services sold on credit. The due amount should usually be paid off within a short period of time and is different from other short and long term business debt. The accounts payable head also includes the amount of accrued expenses. Accrued expenses refers to the expenses that the company has incurred but not yet paid.
For example Roma buys pizza dough, cheese and vegetables in bulk from a single vendor. The vendor supplies the required raw materials every week but receives payment for the same only once in 2 months. Suppose the company orders about Rs.15,000 worth of goods every week, at the end of every alternate month the accounts payable of the company is Rs.1,20,000 (15,000 * 8).
The utilities bill of the company is Rs.2,000 every month. Roma pays the total bill amount of Rs.6,000 at the end of each quarter. So at the end of 1st month the accrued expense is Rs.2,000 and it is Rs.4,000 at the end of second month.