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Who is Debtor ?

In brief, Debtor is our customer. We sell the goods to him on credit. If we sell him goods with cash or cheque or credit card, then there is no need to open debtor account in books. Debtor’s closing balance is also our current asset and it is shown in balance sheet’s asset side. It is also mention in current asset when we calculate working capital for maintaining good working capital management.


If we study the meaning of debtor in detail, debtor is the person who gets the debt from other person. This debt in cash or other form. Other person who gives the debt to the debtor will be creditor. If debtor gets the debt from bank, he is known as borrower.

Debtor as Defaulter 


Debtor will be defaulter when he is unable to pay his debt. In the books of creditor, it will show bad debt.


 Important of Debtor for Business Organization 


With this company can analysis different amount due from different debtors by making filter in excel and know different questions like what is the amount due between the two ranges or two periods.

If any debtor is not paying after maturity, then we can take action after calculation total receivable amount from him.

To know the value of about debtor is also very important for calculation of average collection period and debtor turnover ratio.

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Accounting Education: Who is Debtor ?
Who is Debtor ?
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Accounting Education
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