Debtor

Accounting is a way to methodically record financial data so you can assess the stability of the business. Different concepts and terminologies are used in this process. One of the keywords in accounting is “debtor.”

Any individual or organization that owes money to another is said to be a debtor (including the government). The debtor often has to pay both the principal and interest on the debt. The term “debtor” is usually used to refer to a borrower, while the term “issuer” is used when a company’s debt takes the form of securities.

A debtor’s connection is finished with the creditor, who is the organization to which the debtor owes money. As an illustration, “A” obtains a loan from the Bank. The bank is the creditor; A is the debtor. However, if “A” puts money in the Bank, A becomes the creditor, and the Bank becomes the debtor in this situation.

There are two different kinds of debtors: long-term debtors and short-term debtors.