Determination Debtors And Creditors - SS1 Accounting Lesson Note

It is important for a business to keep track of its debtors and creditors to ensure that it maintains a healthy cash flow. This can be done by regularly reviewing its accounts receivable and accounts payable reports. By doing so, a business can follow up on overdue payments and manage its cash flow effectively.

Determination of debtors

Debtors are individuals or companies who owe money to a business. They are also known as accounts receivable. This can happen when a business sells goods or services to a customer on credit, meaning the customer pays at a later date. To determine who the debtors are, a business must keep track of all its unpaid invoices and customer accounts. These are recorded in the business's accounting system and updated regularly.

Determination of creditors

Creditors are individuals or companies that a business owes money to. They are also known as accounts payable. This can happen when a business buys goods or services on credit from a supplier, meaning that the business pays at a later date. To determine who the creditors are, a business must keep track of all its unpaid bills and supplier accounts. These are also recorded in the business's accounting system and updated regularly.