1. Explain the following accounting terminologies a. Debtors b. Creditors c. Capital d. Purchase return.
Answers
Answer:
A debtor is a company or individual who owes money. If the debt is in the form of a loan from a financial institution, the debtor is referred to as a borrower, and if the debt is in the form of securities – such as bonds – the debtor is referred to as an issuer.
A creditor is an entity (person or institution) that extends credit by giving another entity permission to borrow money intended to be repaid in the future. A business that provides supplies or services to a company or individual and does not demand payment immediately is also considered a creditor, based on the fact that the client owes the business money for services already rendered.
Capital is a term for financial assets, such as funds held in deposit accounts and/or funds obtained from special financing sources. ... Capital assets can include cash, cash equivalents, and marketable securities as well as manufacturing equipment, production facilities, and storage facilities.
A purchase return occurs when a buyer returns merchandise that it had purchased from a supplier. Since the return of purchased merchandise is time consuming and costly, under the periodic inventory system there will be an account Purchases Returns.