Credit

Credit (Definition)

In accounting, a credit is an entry that either decreases assets or increases liabilities and equity on the companys balance sheet.

Key aspects of credit include:

1. Represents the right side of a journal entry in double-entry bookkeeping
2. Increases liability, revenue, and equity accounts
3. Decreases asset and expense accounts
4. Always paired with a corresponding debit entry
5. Essential for maintaining the balance in accounting equations
6. Used to record various transactions such as sales, receipts, and adjustments
7. Understanding credits is crucial for accurate financial record-keeping

Proper use of credits is fundamental to maintaining accurate and balanced financial records.