Accountancy/Creditors
Creditors are people that you owe money to. So if Example Company Ltd bought a motor car on credit, the accounting entries would be as follows:
| Date | Description | Post Ref. |
Dr | Cr | |
|---|---|---|---|---|---|
| 2006 Feb |
1 | Motor vehicle (Asset) | 10,000 | ||
| Creditors (Liability) | 10,000 | ||||
Later we make a payment
| Date | Description | Post Ref. |
Dr | Cr | |
|---|---|---|---|---|---|
| 2006 Feb |
28 | Creditors (Liability) | 100 | ||
| Cash (Asset) | 100 | ||||
Whew! Those repayments are going to take some time...
As we saw when we discussed with debtors, when you receive a bank statement the bank shows you the position from the bank's point of view. When you are in credit, you have the asset and you are a creditor of the bank - the account is a liability account for the bank, as it owes you money , if and when you can withdraw all your money. When you are in debit, you are a debtor to the bank, and the bank is your creditor, and your account with the bank is an accounts receivable or asset to the bank.