Question

Meaning and definations of debtors and creditors

Answer 1

debtors is the party from whom we have to receive the payment in the form of cash or any negotiable instrument.This is asset for the firm.

creditors is the party to which we will pay in the future agreed date in the form of cash or any negotiable instrument. This is liability for firm.

Answer 2

Debtors :-

Debtors are those who owe money or anything else, or they are those persons from whom a bussiness has to recover money on account of goods & services sold on credit.

For example :- Goods sold to Mr. X for ₹ 1,000 on credit , here in this case, Mr.X is our debtor or customer.

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Creditors :-

Creditors means to whom money is owing, it means to deliver goods or services but the payment should be made on future date or subsequent date. In other words, Creditors are those from whom we purchase goods & services or merchandise for the purpose of re- sale on credit, i.e; payment is made at a future date.

For example :- Goods purchased from Mr.Y for ₹ 5,000 on credit, Here Mr. Y is our creditor.