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Definition and Examples of


Explanation: In accounting, a credit is an entry that decreases an asset or expense account, or increases a liability or equity account. It’s the opposite of a debit.

Example: When your web development business pays a supplier, a credit is made to the cash account.

Potential Issues: Incorrectly applying credits in accounting records can lead to overstatement or understatement of liabilities and equity. This misrepresentation affects the accuracy of a company’s financial statements and can lead to poor financial decisions.

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