Trade payables are money the business owes to whom?

• A. A credit supplier
• B. A credit customer
• C. The bank
• D. The owner

Answer: (A)

Trade payables are amounts owed to suppliers for goods or services bought on credit. This means the business has to pay those suppliers in the future, so it appears as a current liability on the balance sheet.

The person you owe in this case is the supplier who provided the goods or services on credit. A credit customer would owe money to the business (that’s a trade receivable, not a payable). The bank is a lender, not a supplier of goods or services on credit. The owner is the source of capital or drawings, not a supplier you owe for purchases.

Example: if you buy stock on credit from a supplier, you record a liability to that supplier (trade payables) and an expense or asset (depending on the purchase). When you pay the supplier, you reduce the trade payables.