Credit

Aspects of transactions To determine whether one must debit or credit a specific account we use either the  accounting equation  approach which consists of five accounting rules or the  traditional approach  based on three rules (for Real accounts, Personal accounts, and Nominal accounts) to determine whether  to debit  or  to credit  an account. Real accounts  are the assets of a firm, which may be  tangible  (machinery, buildings etc.) or  intangible  (goodwill, patents etc.) Personal accounts  relate to individuals, companies, creditors, banks etc. Nominal accounts  relate to expenses, losses, incomes or gains. Whether a  debit  increases or decreases an account depends on what kind of account it is. An increase to an  asset  account is a debit. An increase to a  liability  or to an  equity  account is a credit.  Kind of account Debit Credit Ass...

In double entry bookkeeping, debits and credits (abbreviated Dr and Cr, respectively) are entries made in account ledgers to record changes in value resulting from business transactions. Generally speaking, the source account for the transaction is credited (that is, an entry is made on the right side of the account's ledger) and the destination account is debited (that is, an entry is made on the left side). Total debits must equal total credits for each transaction; individual transactions may require multiple debit and credit entries to record. The difference between the total debits and total credits in a single account is the account's balance. If debits exceed credits, the account has a debit balance; if credits exceed debits, the account has a credit balance. For the company as a whole, the totals of debit balances and credit balances must be equal as shown in the trial balance...

Credit (from Latin  credit , " (he/she/it)  believes") is the trust which allows one party to provide money or resources to another party where that second party does not reimburse the first party immediately (thereby generating a debt), but instead promises either to repay or return those resources (or other materials of equal value) at a later date. In other words, credit is a method of making reciprocity formal, legally enforceable, and extensible to a large group of unrelated people. The resources provided may be financial (e.g. granting a loan), or they may consist of goods or services (e.g. consumer credit). Credit encompasses any form of deferred payment. Credit is extended by a creditor, also known as a lender, to a debtor, also known as a borrower. Credit does not necessarily require money. The credit concept can be applied in barter economies as well, based on the direct e...