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Question 9

Distinguish between debtors and creditors.

Answer
Base Debtors Creditors
Meaning Persons or organisations that are liable to pay money to a firm are called debtors. Persons or organisations to whom the firm is liable to pay money are called creditors.
Nature They have debit balance to the firm. They have credit balance to the firm.

Payment

Payments are received from them.

Payments are made to them.

Shown They are shown as assets in the Balance sheet under Current Assets. They are shown as liabilities in the Balance Sheet under Current Liabilities.

 

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