Certified Medical Administrative Assistants (CMAA) Practice Exam

Amounts owed to creditors are referred to as accounts payable because they represent the obligations of a business to pay for goods and services it has received but not yet paid for. This term specifically highlights the short-term debts that a company incurs while purchasing goods or services on credit. Accounts payable are recorded on the company's balance sheet as current liabilities, indicating that these are amounts that the organization intends to settle in the near future, usually within a year.

While liabilities is a broader term that encompasses all financial obligations of a company, including both current liabilities (like accounts payable) and long-term debts, the specific amount due to creditors specifically falls under accounts payable. Accounts receivable, on the other hand, refers to amounts a business is owed by customers who have purchased goods or services on credit. Income statements are financial reports that summarize revenues and expenses over a specific period, showing the profitability of a business, rather than focusing on amounts owed to creditors.