Which term refers to businesses that have sold goods or services on credit and will collect this money at a future date; often referred to as accounts payable by accountants?

• A. Debtors
• B. Assets
• C. Liabilities
• D. Creditors

Answer: (D)

When a business sells on credit, it expects to receive cash later, so what it has is a claim on that money. That claim is recorded as an asset called accounts receivable, and the people or firms who owe the money are known as debtors. Creditors, on the other hand, are those to whom the business owes money, which shows up as liabilities in accounts payable. So the description of selling on credit and collecting later fits debtors (accounts receivable), not creditors.