Bookkeeping › Sales & Purchase Ledgers

What is a debtor and a creditor?

Beginner

Answer

A debtor (trade receivable) is someone who owes the business money, typically a credit customer—an asset. A creditor (trade payable) is someone the business owes money to, typically a credit supplier—a liability. Their balances live in the sales and purchases ledgers respectively.
Real-world example A customer who bought on credit is a debtor; a supplier awaiting payment is a creditor.

Common follow-ups: Is a debtor an asset or liability? | Where is each recorded?