What is the difference between debtors and creditors
Answers
Business transactions, at their simplest, have two parties involved which are the creditorand debtor. In short, a creditor is someone who lends money while a debtor is someone who owes money to a creditor
term used in accounting, 'creditor' refers to the party that has delivered a product, service or loan, and is owed money by one or more debtors. A debtor is the opposite of a creditor – it refers to the person or entity who owes money.
Debtors are shown as assets in the balance sheet under the current assets section while creditors are shown as liabilities in the balance sheet under the current liabilities section. Debtors are an account receivable while creditors are an account payable.
Creditors' claims on assets are called liabilities. 4) The owner's claim on assets is called equity. 5) The accounting equation shows that the ownership or business assets can be shared between creditors and owners.
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