Question

A person who owes money to a firm is called a _____:(A) Creditor(B) Debtor(C) Lender(D) None of these

Answer 1

A person who owes money to a firm is called a Debtor.

Answer - Debtor (Option B)

Explanation:

• A debtor is a client who has bought a good or service and is therefore obliged to pay the provider in exchange.
• Therefore, on a basic level, at one moment or another, nearly all businesses and individuals will be debtors.
• Customers / suppliers are called debtors / creditors for accounting purposes.

• Usually the word "Sundry" relates to small or uncommon customers / companies not allocated individual ledger accounts but categorized as a group.
• Sundry debtors are tiny entities that owe cash to the business.

Answer 2

Answer:

A person who owes money to a firm is called a B) Debtor

• A debtor is a person who borrows money from a company, that is, a person that the company has debts from the debtor, which are the assets of the company.
• A debtor is a person or entity that agrees to immediately receive money from another party if that party promises to return the money received on time.
• In other words, the debtor owes money to another person or organization. In any case, the debtor has a debt and remains a debtor until the full amount is paid.
• You are responsible for the debt. Debtors are often required to repay debt with or without accrued interest.

Explanation for incorrect:

Creditor:A creditor is a corporation, business, or legal entity that provides goods, services, or loans to a debtor.

Once a loan is issued by a lender, repayment is usually expected at a later agreed date.

Lender:

A lender can be defined as any person or entity that lends money to another party and receives money in return, with or without additional future interest.

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