A Party to Whom the Entity Owes Money for Goods

question 18

Multiple Choice

A party to whom the entity owes money for goods or services provided to the entity is called a:

• A)Creditor
• B)Debtor
• C)Debit
• D)Credit

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Definitions:

Increase Assets

The act of growing the resources owned by an entity that have future economic value and can be measured and expressed in monetary units.

Business Entity Assumption

A principle in accounting that treats a business as separate from its owners or other businesses, allowing for independent financial accounting and reporting.

Accounting Equation

The accounting equation, Assets = Liabilities + Equity, is the fundamental formula in accounting, ensuring that a company's balance sheet is balanced.

Stockholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities, representing the owners' share.