Page 17 - Book-keeping for Secondary Schools Student’s Book Form One

Introduction to Book-Keeping

(ix) Debtor: This term refers to a or suppliers for goods or services
customer who buys goods or services purchased on credit.
from an enterprise on credit. Thus, (xiv) Other payables: This refers to
a debtor is a person who owes amounts payable to persons that
money to the business. He or she result from transactions with the
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has an obligation to the business. The business other than purchases of
amount receivable from the debtors goods for resale. An example is

of the enterprise is an asset to such where the business buys a non-
enterprise and is treated as a current current asset on credit.
asset in the statement of financial (xv) General ledger: This refers to the
position. Another name for debtor central repository of all financial
is accounts receivable. transactions recorded by a business.

(x) Creditor: This refers to a person It is categorised by accounts such as
who sells goods or renders services cash, accounts payable, and accounts
on credit to an enterprise. Therefore, receivable.
a creditor is a person to whom the (xvi) Trial balance: It is a list of all
enterprise owes money. The amount general ledger accounts and their
payable to creditors of the enterprise
is a liability to that enterprise and is balances. It checks whether debits
treated as a current liability in the equal to credits and to detect any
statement of a financial position. errors before preparing financial
Another name for creditor is accounts statements.
payable. (xvii) Revenue: The terms refers to income
(xi) Trade receivables: This refers to generated by a business through its
money owed to a business by its primary operations, such as sales of
customers for goods or services goods or services.
sold on credit. (xviii) Depreciation: This refers to the

(xii) Other receivables: This refers to systematic allocation of the cost of
amounts receivable from persons a long-term asset over its useful life
other than those resulting from to match such cost with the revenue
credited sales of goods or services generated by the asset over its life.
to customers. An example of other (xix) Cashflow: This refers to the
receivables are the ones resulting movement of cash into and out of
from the business lending money to a business over a specific period.
its employees.
(xiii) Trade payables: This refers to money Cashflows can either be cash inflows
or cash outflows.
owed by a business to its creditors

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