Dr. Paul Borosky, DBA, MBA
Business Consultant & Author
Guide 15 of 34 · The Balance Sheet
Accounts Payable vs. Accrued Expenses
Two kinds of money owed. One has an invoice.
Both are current liabilities. Both are due soon. The difference is paperwork: accounts payable comes with a supplier’s bill, while accrued expenses are costs the company already owes before anyone sends one. Apple uses its payables like a free loan, and it takes about 115 days to pay.
Last Updated: 10/27/2026 · Written by Dr. Paul Borosky, DBA, MBA
The Short Answer
What Is the Difference Between Accounts Payable and Accrued Expenses?
Textbook Definition
Accounts payable is money owed to suppliers for goods or services received and invoiced but not yet paid. Accrued expenses are expenses incurred but not yet invoiced or paid, such as wages, interest, and taxes. Both are current liabilities.
In Plain English
Payables are bills sitting on the desk. Accrued expenses are bills that have not arrived yet but are already owed, like wages your team earned this week before payday. Either way, the cash goes out soon.
Days Payable
365 ÷ Accounts Payable Turnover
Apple, fiscal 2025: about 115 days
Side by Side
Accounts Payable vs. Accrued Expenses at a Glance
| Question | Accounts payable | Accrued expenses |
|---|---|---|
| Is there an invoice? | Yes | Not yet |
| Who is owed? | Suppliers and vendors | Employees, tax agencies, lenders |
| Typical examples | Parts, materials, services | Wages, payroll taxes, interest |
| Where on the balance sheet? | Current liabilities | Current liabilities |
| Usual timing | 30 to 60 days | Next payday or tax date |
Both lines are interest-free while they are outstanding.
Both sit in the current liabilities section of the balance sheet, so both feed the current ratio. The book calls accrued expenses a loan from employees and the government with no interest charged. Until the paycheck clears or the tax is sent, the company can use that cash.
One Real Company
Apple’s Accounts Payable, 2021 to 2025
Payables grew faster than sales. For Apple, that is a choice, not a cash problem.
| Line | 2025 | 2024 | 2023 | 2022 | 2021 |
|---|---|---|---|---|---|
| Revenue | 416,161 | 391,035 | 383,285 | 394,328 | 365,817 |
| Accounts payable | 69,860 | 68,960 | 62,611 | 64,115 | 54,763 |
| Payables, % of sales | 16.8% | 17.6% | 16.3% | 16.3% | 15.0% |
| Payables turnover | 3.16 | 3.21 | 3.40 | 3.73 | n/a |
| Average days payable | 115.5 | 113.6 | 107.3 | 97.8 | n/a |
Source: Apple Form 10-K filings as analyzed in the book. $ millions. Turnover and days use two-year averages, so 2021 is not available. Apple does not report accrued expenses as a separate line in the book’s summary; they sit inside other current liabilities ($75.4 billion in 2025).
The Method
How to Read These Two Lines in 4 Steps
Find both in current liabilities.
Accounts payable usually has its own line. Accrued expenses may be listed separately or folded into other current liabilities, as in Apple’s summary.
Turn payables into a percent of sales.
A rising percentage means the company is paying suppliers more slowly. Apple went from 15.0% to 16.8%.
Convert it to days.
Days payable shows how long suppliers wait. Apple’s stretched from about 98 days to about 115.
Decide if slow is smart or stressed.
A powerful buyer stretching terms is using free financing. A struggling company paying late is a warning. Check cash flow to tell them apart.
Using Suppliers’ Money
Every day Apple waits to pay, it keeps that cash working for itself. With more than $69 billion in payables, that is a very large interest-free loan. Pair it with fast collection and you see one reason Apple can run with a current ratio below 1.
Compare It
Apple vs. Microsoft: Two Powerful Buyers
Apple and Microsoft land close together here. Both take roughly three to four months to pay suppliers. Both are huge customers, and both use that leverage to hold onto cash longer. When two dominant companies show similar numbers, it usually reflects similar bargaining power, not similar business models.
Why It Matters
How Do Payables and Accruals Affect Cash Flow?
Here is the part beginners miss. When payables or accrued expenses go up, the company has recorded a cost but has not paid the cash yet. So on the cash flow statement, an increase in these lines is added back to net income in operating activities. The company kept the cash a little longer.
The reverse is true too. If a company suddenly pays its suppliers faster, payables fall and operating cash flow takes a hit, even if profit did not change at all. That is why a one-year jump or drop in operating cash flow can come from timing, not from the business getting better or worse.
For Apple, payables grew from $54.8 billion in 2021 to $69.9 billion in 2025. That $15.1 billion increase was cash Apple held onto by paying on longer terms. Small on Apple’s scale. Enormous for almost anyone else.
Beginner Traps
What Do Beginners Get Wrong About Payables and Accruals?
- Assuming a rising payables number always means cash trouble.
- Thinking accrued expenses are optional or far off.
- Missing accruals hidden inside other current liabilities.
- Comparing payables to assets instead of to sales or purchases.
- Forgetting both lines count against the current ratio.
- Ignoring how much bargaining power the buyer has.
How the Book Grades Apple’s Payables
From the Book
The Free Loan Hiding in Plain Sight
Balance Sheet · Accrued Expenses
Money Owed, Interest Free
Another way to look at accrued expenses would be as a loan from the government or employees, with no interest charged!
Every current liability on Apple’s balance sheet, with five years of numbers and a grade for each.
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Payables and Accrued Expense Questions
Is accounts payable an accrued expense?
Are accrued expenses current liabilities?
Is a high accounts payable balance bad?
Keep Going
Related Guides
Payables and accruals are two pieces of the current liabilities picture.
Written by Dr. Paul Borosky, DBA, MBA, business consultant, author, and adjunct finance instructor with an MBA focused in finance.
This page is for general educational purposes only. It is not investment, financial, tax, accounting, or legal advice, and nothing here is a recommendation to buy or sell any security. Apple and Microsoft figures come from their public filings as analyzed in the book. Apple and Microsoft are trademarks of their respective owners, and this page is not affiliated with or endorsed by either company.