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This question is about junior accountant skills.
What is a creditor in accounting?
A creditor in accounting is a term used to describe the individual or entity that has delivered a loan, service, or product and is therefore owed money by one or more debtors. A debtor is a person or entity that owes money for a product, service, or loan.
Creditors can be categorized as real creditors or personal creditors. Examples of real creditors include:
Banks
Finance companies
These professional entities make loans based on contracts and loan agreements to individuals, businesses, or companies.
Most of these documents stipulate that if a borrower does not pay back the loan in the agreed-upon time, the real creditor (lender) has the right to claim any of the borrower's real assets or collateral.
Examples of personal creditors include:
Individuals who loan money to friends
Individuals who loan money to family
Individuals who loan money to businesses
Personal creditors loan funds to these different groups to provide immediate services or supplies to the individual, business, or company. This allows for a delay in payment in terms of the debtor paying the personal creditor back.
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