In the debtor/creditor relationship, who is considered the debtor?

Prepare for the ACA ICAEW Exam. Study using interactive flashcards and multiple choice questions, with hints and explanations for each question. Master your exam preparation today!

In the debtor/creditor relationship, the debtor is the party that owes money or a financial obligation to another party. In this context, the customer is regarded as the debtor because they are the ones who have received goods or services and are responsible for paying for them.

Understanding the roles in this relationship helps clarify the dynamics of financial transactions. The creditor, on the other hand, is the party that extends credit or provides a loan or service, expecting payment in return. Therefore, in a typical scenario, the customer is obligated to settle their debts to the creditor, which could be a supplier or a financial institution.

Other entities listed, such as the bank, regulatory authority, and agent, do not fit the definition of a debtor. The bank acts as a creditor when it provides loans, the regulatory authority oversees compliance in financial transactions but does not owe money in this context, and an agent typically represents one of the parties but is not the one with the obligation to pay. Thus, the only appropriate answer aligns with the classic definition of a debtor being the customer.

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