Class 11th Question 9 : distinguish between debto .. Answer

In other words, a debtor is a person or entity who owes money to another. The sum owing to a debtor is repaid on a regular basis, with or without interest. A creditor is a person or an organization who gives money to another party right away in exchange for getting money at a later date, with or without interest.

Name the branch of commerce, which keeps a record of monetary transactions in a set of books. Ans.The 3 most essential accounting fundamentals are assets, liabilities, and capital. When Alpha Company lends money to Charlie Company, Alpha becomes the creditor, while Charlie becomes the debtor. Charlie Company is the creditor and Alpha Company is the debtor if Charlie Company sells items to Alpha Company on credit. Freight – Freight is the transportation cost that is related to the delivery of goods from the manufacturer to the user. For accounting purposes, the user adds these costs to the cost of goods received.

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It also consists of the cash in hand and cash in the bank. The salaries, wages, bonds, properties, loans, etc. are indicated in the ledger. Thus, a ledger account gives a complete bird’s eye view of all the essentialities possessed by the organisation. For more details learn Class 11th Accounts Chapter 1 Question Answer. This purpose is served by preparing the balance sheet that facilitates ascertaining the true financial position of the business. A debtor is a person or an organization who accepts to accept money from another party immediately in exchange for the obligation to repay the money in a timely manner.

Related Important Links for Class 11 Accountancy

1. Sundry Debtors and Sundry Creditors are the stakeholders of the company.
2. For more details learn Class 11th Accounts Chapter 1 Question Answer.
3. This article will expound on the 10 key differences between debtors and creditors, who debtors are, who creditors are, and how these roles intertwine in the grand scheme of financial interactions.
4. A creditor is a person or an organization who gives money to another party right away in exchange for getting money at a later date, with or without interest.
5. Creditors allow a credit period, after which the company has to discharge its obligation.
6. Moreover, provision for bad debts is created on debtors, in case if a debtor become insolvent and only a small part is recovered from his estate.

It is of great importance that the different assets and liabilities should be arranged in the balance sheet on certain principles. The gross margin depends on the gross profit made by the organisation over net sales. Profit and Loss Account – The profit and loss account shows the net profit and net loss of the business distinguish between debtors and creditors class 11 for the accounting period. This account is prepared in order to determine the net profit or net loss that occurs during an accounting period for a business concern. If a company owes money to another company. Then the former company will be debtor while the latter company is the creditor.

Topics Covered In Class 11 Accountancy Chapter 1 Introduction to Accounting

An entity that provides credit is in the business of selling goods or services, with credit extension serving as an afterthought. To remain competitive in the marketplace, it may be important to extend credit. In this article, we are going to study Creditors and debtors. Here we are also going to differentiate between Creditors and debtors.

These costs include manufacturing overheads, direct labour, and direct production costs. Financial statements reflect the impact of the financial effects of the transactions on the organisation. The preparation of financial statements is done by both profit and non-profit organisations. It forms a crucial part of the annual report of any organisation. In accounting, capital refers to the owner’s equity or the amount of money invested by the owner(s) into the business. It represents the ownership stake and reflects the net assets of the business after liabilities are deducted from assets.

Mention any 2 important objectives of accounting –

Creditors, suppliers, and public groups are all considered examples of external stakeholders. So, there is a fine line of differences between debtors and creditors which we have discussed in the article below, take a read. Government – It desires records to determine national profits, GDP, industrial growth, etc.