Which term describes money owed by the business?

The term that describes money owed by the business is accounts payable. This represents the obligations that a business has to pay off short-term debts to its creditors or suppliers. When a company purchases goods or services on credit, the amount due for these purchases is recorded as accounts payable until it is settled. This liability is critical for cash flow management and is part of the balance sheet that reflects the company's financial health. Understanding accounts payable helps in assessing how well a business manages its debts and obligations, which is an essential aspect of maintaining operational efficiency.

In contrast, accounts receivable refers to the money owed to the business by its customers. Working capital measures the short-term liquidity of a company, indicating if it has sufficient assets to cover its current liabilities, while operational expenses denote the costs incurred during normal business operations. Each of these terms plays a significant role in financial management, but accounts payable specifically deals with what a business owes rather than what it is owed or its operational costs.