BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Creditors is an example of business liability. A liability is defined as a company’s legal financial debts or obligations that arise during the course of business operations.

Detailed explanation-2: -On the company’s balance sheet, the company’s debtors are recorded as assets while the company’s creditors are recorded as liabilities.

Detailed explanation-3: -Creditors are a liability because they can be considered as having a negative effect on the company’s net worth. They would be considered an asset if they brought in more money than it cost them to produce and distribute their products.

Detailed explanation-4: -Recorded on the right side of the balance sheet, liabilities include loans, accounts payable, mortgages, deferred revenues, bonds, warranties, and accrued expenses.

Detailed explanation-5: -Creditors are individuals/businesses that have lent funds to another company and are therefore owed money. By contrast, debtors are individuals/companies that have borrowed funds from a business and therefore owe money.