Our earlier discussions on this blog of accounting basics have focused on the assets side of a balance sheet. Now let’s move over to the right-hand side. This includes the two great subdivisions of liabilities and equity. For a simple business entity we might break down the liabilities section into just two parts itself: accounts payable and notes payable. Accounts payable is the obverse of the accounts receivable heading on the asset side. Payables are (typically non-interest bearing) debts that the firm must pay to its trade creditors, like the due bill to the electricity company for the juice that keeps that conveyor belt moving. A bit of forensic accounting here: when a business is audited because fraud is suspected (either because the principals of the business are worried about a crooked employee or because investors/creditors worry about the potential crookedness of the principals), the payables are always an object of great scrutiny. The diversion of ...