Learn Mearning of Debtor and Creditors
Those assets of the business, which are kept for short term for converting into Cash or for resale debtors, bank balance, etc., are some of the examples of current assets.
A person who owes money to the firm because of credit sales of goods is called a debtor. For example, when goods are sold to a person on credit that person pays the price in future. He is called a debtor because he owes the amount to the firm, commonly customers of goods/ services are known as debtors.
A person to whom the firm owes money is called a creditor, when goods are purchased on credit from supplier, commonly suppliers of goods/ services are known as creditors.
The person who owns the business by making investment and bears all the risks connected with the business is called the proprietor.
It is the amount of money or the value of goods which the proprietor takes for his personal use.
Expense is the amount spent in order to produce and sale of goods and services. Expenses is the cost of the use of things or services for the purpose of generating revenue like:- purchase expense, printing & stationery expenses, conveyance expenses etc.
Income is the profit earned during a period of time. In other words, the difference between revenue and expense is called income.
income = Revenue – expense
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