A borrower is a person who has received a loan and is obligated to repay the amount borrowed (principal) with interest and other fees, according to the loan terms.
Standards established by creditors that must be satisfied by potential debtors in order for credit to be given, typically reflecting the applicant's ability to repay the loan or make payments for goods or services acquired.
A sale made on terms in which cash is to be paid at an agreed future date. As the debtors, who are customers to whom credit sales have been made, pay, the debtors' control account balance will be reduced.
Debtors refer to individuals or entities that owe money to an organization, often due to sales of goods or services. This concept is significant in accounting as it affects the balance sheet and requires careful management to ensure accurate financial reporting.
Doubtful debt refers to an amount owed to an organization by a debtor that is unlikely to be received. Organizations often create a provision for doubtful debts based on specific debts or general assumptions about debtor reliability.
A ledger account credited with interest receivable until received, after which it is moved to the bank and credited to the profit and loss account for the period.
Involuntary bankruptcy occurs when creditors force a debtor into bankruptcy proceedings, typically under Chapter 7 or Chapter 11 of the U.S. Bankruptcy Code.
An accounting method where one amount is deducted from another. It helps to reflect a more accurate financial position by deducting provisions or allowances from gross figures.
Personal accounts are used to record transactions with individuals or entities, such as debtors and creditors. These accounts are essential for managing relations and obligations with people and organizations.
A prepayment, also referred to as a payment in advance, is a payment made for goods or services before they are actually received. In accounting, it is treated as a deferred debit under the accruals concept and is shown as a debit balance under debtors in the current assets section of the balance sheet.
A financial estimate calculated to cover debts deemed uncollectable during an accounting period. It distinguishes between general and specific provisions based on the likelihood of debt recovery.
A Scheme of Arrangement is an agreement between a company and its members or creditors to restructure the business or debts, often used during financial difficulties or takeovers and requires court sanction.
The Trade Receivables Collection Period refers to the time given to customers to pay their accounts, which is typically 30 days. However, late payments can occur and may affect cash flow significantly.
Working Capital Adjustment, specifically the term 'monetary working-capital adjustment', refers to the modifications done to the working capital of a business under current-cost accounting. It accounts for fluctuations in bank balances, overdrafts, and cash required to support daily operations.
