Adventis Financial Modeling Certification (FMC) Level 1 Practice Test 2025 - Free Financial Modeling Practice Questions and Study Guide

Question: 1 / 400

What are accounts payable?

Amount owed to an organization's customers

Amount owed to an organization's vendors

Accounts payable refers to the liabilities that a company incurs when it purchases goods or services on credit from suppliers or vendors. This represents amounts that the organization must pay in the future for those purchases. It is an essential aspect of a company's balance sheet and reflects the company's obligation to settle its debts with suppliers, typically within a short period.

Understanding accounts payable is crucial as it indicates the company's cash flow situation and its ability to manage its short-term liabilities. Maintaining optimal accounts payable levels is important for liquidity management, ensuring that the company can meet its obligations without straining its cash resources.

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The company's cash reserves

Equity held by shareholders

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