trade creditors

Definition of Trade Creditors

A supplier who gives you their own products to your business or gives his services to your business, but you have not paid him Yet are called Trade Creditors.

It is focused on the liquidity of the firm. The amount on the balance sheet of the business is written as liability, On the other hand, on the balance sheet of a trade creditor, it is written as assets.

Questions About Trade Creditors

Following are some questions:

1) Is Trade Creditor a Liability?

Answer: Yes

2) On which balance sheet it is written as Assets?

Answer: On the balance sheet of trade creditor.

Example

Suppose you have bought $500 products on 1 July, and also you got an electricity bill of $200 which you have to pay on 30 July. Then on the date of 29 July, your business trade creditor would be $700.

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