A debtor is What is the difference between debtors and creditors

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

In accordance with the law, a debtor is a debtor, which can be both a citizen (individual) and an organization (legal entity), as well as an economic entity that has a debt.

Accounts receivable and accounts payable. Concepts

At present, the debts of participants in economic relations have become a large part of the entire system of economic and economic turnover. Obligations of this kind in modern times are considered as an integral element and the need for financial calculations.

Debt can be accounts payable and receivable. These are the main types of debt. The participants in receivables and payables are, respectively, debtors and creditors. The concept of this kind of debt obligations needs to be formulated in more detail.

Accounts receivable is the amount consisting of debts that are due to the organization as a result of its interaction with other organizations or individuals in the economic sphere. The presence of such debts means that the funds of the enterprise to which they are owed are not used by themselves, but by the party that owes them.

Accounts payable is the amountcollected from the debtor in favor of another person who needs to repay the debt. This debt obligation arises when the agreed time of payment for the fulfilled obligation, payment for the purchased goods, services received has expired, and the payment has not been made. The difference from receivables is that the debtor uses funds that do not really belong to him, that is, funds that are debt amounts for him.

Common features and differences

Receivables and payables have something in common and something different from each other. What is common is that both debt obligations are based on a time gap between fulfillment and payment. Such a process represents a failure to fulfill the function of money as a means of payment.

The difference between debts is the features of their functioning as varieties of obligations that constitute debt.

The difference between a debtor and a creditor

In order to understand the distinctive characteristics, it is necessary to determine that the debtor is a person who has a debt to another person. In other words, he is the debtor of the creditor.

Debtors and creditors differ from each other in that the latter have the right to demand repayment of the debt from the former. Those who borrowed have only one obligation - to return the money.

What is meant by contractual relationship

Debtors and creditors are often counterparties to each other. In this case, the agreement must bereimbursable. In such documents, one of the counterparties must sell a product or fulfill an obligation, provide a service, perform work, etc. The second counterparty must pay for this product or service within the time period established by the contract. As soon as there is a delay in payment, the overdue person becomes a debtor. Thus, the debtor is the counterparty who has overdue payment under the contract.

Receivables write-off

It must be remembered that most of the debt is not realized quickly. Thus, excessive payments to tax authorities, as well as to financial authorities, can be written off from the balance sheet only after the amount is recalculated against payments that will be made in the future. The indebtedness of workers is generally repaid in installments over a long period of time, by means of deductions from the sums due to them for payment. There may be persons who resigned from the organization and did not return the debt voluntarily, in which case, after the statute of limitations expires, the amounts owed are written off as losses. Also, for a sufficiently long period, the amounts collected on claims are usually not repaid.

Writes off accounts receivable, as well as any other debt, accountant, in the period when the next tax period ends. Usually, there are no fixed days for writing off such debts. Therefore, once the statute of limitations for a particular debt has expired, it should be written off.

Tasks of accounting for settlements withdebtors

Settlements with debtors are of no small importance. The most important component of accounting documentation is the accounting of debt obligations. According to the fundamentals of law, an obligation is always associated with the right of the creditor to oblige the debtor to the mandatory performance of the relevant actions. Fulfillment of obligations is a legal relationship, from a certain point of view, specific persons associated with this legal relationship bear mutual obligations in this legal relationship.

If one person - the debtor - voluntarily performs an action to fulfill obligations, the second person - the creditor - in any case is obliged to accept this execution. If the debtor does not perform the obligation voluntarily, the creditor has the right to apply to the court for enforcement. The court may oblige the debtor to perform forcibly the obligation from all his property. Another feature is that the debtor is a debtor, so his obligation can be enforced by the court, and the creditor is not obliged, but has the right to go to court to fulfill the obligation by the debtor.

Obligation always refers to two persons - the creditor and the debtor. It is possible to single out the main tasks that are set for the function of accounting for settlements with debtors. Among them:

• accounting for the movement of funds, as well as operations for their movement, which must be complete, clear and accurate;
• observance and control over cash and payment discipline;
• establishmentcomposition of receivables, its structure (this includes the definition of payment terms, type of debt, etc.);
• determining the composition of overdue receivables.

Accounts reflecting settlements with debtors

When doing accounting, the employee needs to reflect accounts receivable. All debtors must be accounted for. The account for which debts of this kind are taken into account is formulated in the accounting chart of accounts.

All calculations must be reflected in the following accounts, which in turn, in addition to numbers, have special names. These are accounts 60, 62, 68, 69, 70, 71, 73, 75, 76.

Other debtors

Among all debt holders, other debtors stand out - these are people whose information should be reflected in the accounting in the column "Other …" on an article specially provided for this. It combines a variety of amounts included in the same group. This includes both tax arrears and employee arrears if they were provided with any amounts, such as loans. Loans can be issued both from the funds of an enterprise or organization, and at the expense of banks. The sums necessary for compensation of damages are put on the same article. Also, this article includes the debt of accountable persons, shortages of commodity values, debts to suppliers. There are a number of other amounts that also apply to this article.

Settlements with other debtors

On an account designed to account for settlements with various debts,except for those for settlements with which separate accounts are provided, settlements with other debtors are taken into account.

Currently, the chart of accounts includes a large number of accounts in order to take into account transactions that were previously recorded on account 76, which was intended for settlements with different debtors. Settlements with creditors were also taken into account on the same account.

Currently, account 377 is provided, which takes into account settlements with other debtors. Settlements with other creditors are now maintained on account 685. Account 377 is provided in order to take into account settlements with debtors, mainly with personnel, subjects of joint ownership, if they are not created as a separate legal entity. As mentioned above, settlements with personnel are made in cases where they were given a loan or they have other obligations to the employer.

Also, account 377 reflects settlements with various banking organizations, in particular for commissions for servicing a banking organization and other similar services provided by banking organizations that are not directly related to the activities of any banking institution.