Creditors and Debtors are two fundamental concepts in accounting, representing parties involved in a financial transaction.
Debtors
Debtors are parties who owe money to a business for goods or services purchased on credit. In other words, a debtor is a customer who has not yet paid for the goods or services received. For example, if a company sells goods worth Rs 10,000 to a customer on credit, that customer becomes a debtor for Rs 10,000 until they pay the amount due.
Creditors
Creditors, on the other hand, are parties to whom a business owes money for goods or services purchased on credit. In other words, a creditor is a supplier or vendor who has not yet been paid for the goods or services provided. For example, if a company purchases goods worth Rs 10,000 from a supplier on credit, that supplier becomes a creditor for Rs 10,000 until the company pays the amount due.
In short, debtors are the customers who owe money to a business, while creditors are the suppliers or vendors to whom a business owes money. The terms “debtors” and “creditors” are commonly use in accounting to track the amount of money owed by or to a business, respectively.
To visit- https://www.mca.gov.in/
