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: 2006Feb 1 Motor vehicle (Asset) Creditors (Liability) 10,000 Later we make a payment 2006Feb 28 Creditors (Liability) 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.