Who is Sundry Creditor in the Balance Sheet as per Accounts?

As soon as a debt is owed for products acquired, the seller becomes the buyer’s creditor, but when a debt is owed for goods sold, the seller becomes the buyer’s debtor. A balance sheet is a statement that outlines the financial position of an enterprise. It is necessary for the balance sheet to show the enterprise’s assets and liabilities based on their characteristic features. Think of debtors (or ‘receivables’) as customers holding those metaphorical I Owe You notes. They’ve received goods or services, but you’re still waiting on that payment. Sundry debtors are a special bunch within this group — they’re the folks who don’t buy a ton of stuff from you on a regular basis.

When the payment is made to the Creditor in cash, cheque, or electronic transfer, the following entry is passed. In short, Creditors are a liability for Business & Debtors are assets of Business. The word debtor is derived from ‘Debree’, a Latin word, meaning ‘to owe’.

1. Businesses use an account to track these transactions and they are called as Sundry Creditor account or Accounts Payable.
2. Businesses use a specific category, known as a miscellaneous creditor account or accounts payable in accounting language, to track these transactions.
3. Timely payment of dues is necessary to keep a friendly or cordial relationship with the providers.
4. They are hence mentioned on the left-hand side of the balance sheet under Assets.
5. People who provide goods or services on credit are known as sundry creditors.
6. For a business to operate successfully and uphold healthy connections with its creditors, managing adequate balance and making timely payments on the debt are crucial.

Furthermore, sundry creditors are an essential component of the working capital management of a company. Managing the payment of sundry creditors effectively is crucial for maintaining good relationships with suppliers and ensuring a smooth supply chain. By managing sundry sundry liabilities creditors efficiently, a company can negotiate better credit terms, take advantage of early payment discounts, and avoid any disruptions in the procurement process.

Classification of Assets and Liabilities

Sundry creditors mean you owe your creditors money and have availed interest-free credit from them. Hence it is a liability to your business until you pay for goods or services sold to you. The financial statements of a business consists of several financial transactions which are recorded. Two such important financial transactions for any business are Sundry Creditors and Sundry Debtors.

1. The purchasing and selling of commodities or services are of utmost importance in commercial operations.
2. Reducing the amount owing to different creditors will improve your earnings.
3. This acts as an asset to the business, and in the books of the company, it is listed on the asset side of the balance sheet.
4. They form as accounts receivable while preparing the financial statements.
5. Debtors are the one, to whom goods have been sold on credit, whereas Creditors are the parties who sold the goods on credit.

The articles and research support materials available on this site are educational and are not intended to be investment or tax advice. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. 11 Financial is a registered investment adviser located in Lufkin, Texas. 11 Financial may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. Bills discounted, as well as guarantees given against loans from another enterprise or person, may also cause liability if the other person does not honor the commitment. Contingent liabilities arise depending on the happenings of certain events.

How confident are you in your long term financial plan?

While sundry creditors and sundry debtors have distinct attributes, they also share some similarities. Both sundry creditors and sundry debtors are part of the company’s balance sheet and play a crucial role in the company’s financial management. They both represent financial obligations or rights arising from credit transactions. Additionally, effective management of both sundry creditors and sundry debtors is essential for maintaining a healthy cash flow and ensuring the smooth operation of a business.

Q4. Why are sundry creditors regarded as a liability to business?

In the Financial world term Creditor is very frequently used, especially in reference to Loans, Bonds, and Mortgages. Take self-paced courses to master the fundamentals of finance and connect with like-minded individuals. Our mission is to empower readers with the most factual and reliable financial information possible to help them make informed decisions for their individual needs. This team of experts helps Finance Strategists maintain the highest level of accuracy and professionalism possible. Our team of reviewers are established professionals with decades of experience in areas of personal finance and hold many advanced degrees and certifications.

Since sundry creditors are listed as a firm’s liability, they will appear on the right side of the credit side of the firm’s balance sheet. Most businesses use a separate accounts category called the accounts payable, or sundry creditors account to track payments from these transactions. It represents the amounts owed by a business to various creditors, including suppliers, vendors, and service providers, for goods or services that have been received on credit. Managing the sundry creditors account is crucial for businesses to maintain accurate financial records and uphold positive relationships with their creditors.

In this way, the term debtor means the party who owes a debt which needs to be payable by him in short duration. Debtors are the current assets of the company, i.e. they can be converted into cash within one year. They are shown under the head trade receivables on the asset side of the Balance Sheet. In general, debtors are the parties who owes debt towards the company. The parties can be an individual or a company or bank or government agency, etc.

In the separate ledger for the sundry creditors, details about the creditors, the amount due, and the due date are mentioned. Current liabilities are those liabilities which are payable within one year. This includes bank overdraft, sundry creditors, bills payable and outstanding expenses. After making the payment, update the sundry creditors ledger to reflect the reduced liability. This ensures that the books accurately represent the current financial position. Regularly reconcile the sundry creditors ledger with the general ledger to ensure accuracy and identify any discrepancies.