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The convention of disclosure requires that all material facts must be disclosed in the financial statements.For example, in the case of sundry debtors, not only the total amount of sundry debtors should be disclosed, but also the amount of good and secured debtors, the amount of good but unsecured debtors and amount of doubtful debts should be stated.
Double entry Accounting is achieved by: Debit – debtors account with value of sales (increasing a current asset) Credit – sales account with total amount (increasing income) Choose credit sales journal if this stock is then on-sold to customers who will pay later. The people/organizations here are known as debtors.
The accounting equation plays a significant role as the foundation of the double-entry bookkeeping system. The primary aim of the double-entry system is to keep track of debits and credits and ensure that the sum of these always matches up to the company assets, a calculation carried out by the accounting equation.
The counterparty is called a creditor. When the counterpart of this debt arrangement is a bank, the debtor is more often referred to as a borrower. If X borrowed money from their bank, X is the debtor and the bank is the creditor. If X puts money in the bank, X is the creditor and the bank is the debtor. It is not a crime to fail to pay a debt.
Receivable turnover ratio or debtor's turnover ratio is an accounting measure used to measure how effective a company is in extending credit as well as collecting debts. The receivables turnover ratio is an activity ratio, measuring how efficiently a firm uses its assets. [1] Formula:
Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration Contracts: December 1992: Amended by SFAS No. 120 114: Accounting by Creditors for Impairment of a Loan—an amendment of FASB Statements No. 5 and 15: May 1993: Amended by SFAS No. 118 115: Accounting for Certain Investments in Debt and Equity Securities: May 1993
The first party is called the creditor, which is the lender of property, service, or money. Creditors can be broadly divided into two categories: secured and unsecured. A secured creditor has a security or charge over some or all of the debtor's assets, to provide reassurance (thus to secure him) of ultimate repayment of the debt owed to him ...
Normal Balances refer to whether the balance for an account in a properly-formed trial balance is usually a debt or a credit. A normal balance also reflects the accounting equation. If a trial balance for an account is reversed, such an account is called a "contra-account" (e.g. accumulated depreciation as an asset or owners drawings as equity ...