Debtor

From Wikipedia, the free encyclopedia

Debtor is one of the account balances in financial statements. Usually it is presented as one of current assets.

In writing ledger accounts a debtor's amount is written on the debit (Dr) side, as the name suggests. Debtor as it appears in balance sheet connotes same meaning as the account receivable [USA accounacy]. In other words, a Debtor is someone who owes you money. It is the oppposite of a Creditor who is someone you owe money to.

In economics a debtor (or a borrower) owes money to a creditor.

If the money owed becomes beyond the possibility of repayment, the debtor faces insolvency or bankruptcy.

NB/ Many books seem to get this idea all screwed-up! Remember: a debit is something coming into a business. A credit is the opposite: it is something going out from the business. The fun starts with the word debtor. This is someone who owns the company being considered money (it's money that should be coming into that company in the future). However for that person, who owes this money, they would say that this company is one of their creditors (it's money going out from them).