Credit
Credit (alternatively known as credit entry and commonly abbreviated Cr because of Latin credere) is any entry into financial books that either increases equity-origin accounts or decreases asset-origin accounts. Any journal entry contains at least one credit.
In a T-account, a debit balance is found on the right-hand side. In addition, credit could also refer to (a) an account receivable when an organization allows a customer to delay the payment or (b) an account payable when an organization owes funds to a supplier or, often a bank, referring to a credit made by another organization.
Credit could finally refer to money that is owed on a credit card. When you want to open an account with a supplier you may be asked to fill in what is called a credit application. A number entered on the right side of any T-account is said to be credited to this account.
Definitions
According to College Accounting: A Practical Approach by Slater (13th edition),
- Credit. The right-hand side of any account. A number entered on the right side of any account is said to be credited to an account.
Related concepts
- Bookkeeping. Recording, filing, and retrieving of financial data, as well as producing those financial reports that are required by laws.
