An example of a debtor due to force majeure would be one that is insolvent due to a natural catastrophe. Consequently, you cannot make the corresponding payment. While you may still be obliged to pay, the judiciary will not impose penalties. Also, in these cases, given that insurance does not cover this type of event, governments provide aid in the form of subsidies and moratoriums on compensation.
Regarding lousy management, it would be a manager who makes a company go bankrupt. That is, because of his inability to handle the situation.
For its part, the negligent could be a department manager who performs activities to harm the company. And, because of them, the company is unable to meet its obligations.
Finally, the one who does it on his own will would be a person who does not pay someone for revenge or simply because he does not want to.
EXAMPLES OF CREDITOR AND DEBTOR
One of the most common models to differentiate between these two subjects is when a bank grants a credit or a loan of money to a client. In this case, the bank would be the creditor and the customer the debtor.
Now, there are many examples in daily life:
- In the purchase of some instalment goods, the seller would be the creditor, and the buyer would be the debtor.
- The telephone company would be the creditor against unpaid mobile bills.
- Before the delay in the payment of any tax, the Tax Agency would be the creditor.
Now you know what debit and credit are and how to do these two essential concepts in the field of account differ from each other. The ideas of debit and credit are pivots on which many theories and accounting concepts are based. These are the basic concepts, and they are relevant in the practical and theoretical work of accountants of all kinds around the world daily.
Not just accountants, but the knowledge and understanding of these two concepts is quite essential for any individual in professional terms. There are many instances where these concepts relate, and unless you have a firm understanding of it, you cannot be familiar with the right context of business situations.