In accounting, the transactions carried out by a company are recorded, classifying them in different types of accounts to order finances; this in order to settle and consult each operation carried out more easily.
These accounts are divided into two large groups: nominal accounts and real accounts; the latter is subdivided into assets, liabilities and capital. Within the liabilities, an account is established for various creditors in which the operations destined to the payment to eventual suppliers are settled.
What does the term "sundry creditors" refer to and how is this type of accounting account recorded? Below you will see the definition of the term and the correct way to keep records.
In this article you will find:
What are sundry creditors?
When a company acquires a debt for inputs from a rare supplier, the transactions are settle in a different creditors account
Debt transactions for the acquisition of merchandise can also be registered in this type of account when the amount is very low or insignificant. Although, thanks to technology, this type of account is less and less common, they are still used to keep accounting by hand.
This way you will not have to add an individual page to the liability book each time an occasional vendor is owed. This will prevent the book from becoming unwieldy and make it easier to record these types of transactions.
How are transactions with various creditors recorded?
Before seating the transactions in the account of various creditors it is important to remember that belongs to liabilities, that is to say, it is an obligation. Therefore, the first entry of this account must be entered in the credit and each payment that is made is recorded in it owed.
That is, when the invoice is received, the total amount owed is noted and each payment is subtracted from it until the account is settled.
For example, a company buys office supplies from an unusual supplier for an amount of 750, this will be balance that is reflected in the Sundry Creditors account, which corresponds to the company's debt with the supplier.
Once the company issues a check for the payment of the debt, a debit is made to the account, paying it off completely.
Importance of keeping a diverse creditors account
Despite the fact that infrequent credits are involved or the amounts owed are insignificant, they are still accounting transactions. Therefore, they must be part of the company's accounting.
On the one hand, it allows you to track the expenses made by the company, which allows you to know what is done with the money. Second, credit purchases made from this type of supplier are necessary goods or services that must be paid for.
Keeping a clear record of each of them will prevent them from forgetting to make these payments or from being made too late; This could lead to a bad credit history, affecting the credibility of the company in the long term.
Therefore, it can be concluded that the various creditors account constitutes an essential part in the accounting of a company.