taxtothebest wrote:I guess what he owed to the supplier can be called a loan too.
I don't think it could. If I loan you something, then you have to give it back to me. The taxpayer doesn't have to give back whatever he received from the supplier. Instead, he has to pay money for it. Thus, it isn't a loan.
does accounting standards specifically categorize such an outstanding balance as 'account payable'
Sounds like an interesting question for the "General Accounting" forum.
As far as the tax side is concerned, indebtedness is closely associated with interest. Where one exists, so must the other. And interest is defined as amounts paid for "the use or forbearance of money".
If you acquire an asset in an installment sale, then you are treated as having taken out a loan from the seller. I think that's where the line is for tax purposes. If there's only one installment due, then there's no indebtedness and no interest need be imputed for tax purposes. However, it seems reasonable for loan treatment to apply if the parties specifically agree to a single deferred payment with interest that accrues.