What is a credit in accounting?

What is a credit in accounting?

What is a credit you may ask? First lets clear the air about credits in accounting and credit cards. While there can be similarities drawn I would ask you to forget what you know about credit cards while reading the below.



A credit is used in double entry accounting to represent the transactions that have occurred on the 'right' side of the ledger or 'T' account. Those on the 'left' side are 'debit'. Feel free to check what is a debit in accounting for more information on debit.

The short form for a Credit is Cr. You might see the abbreviation more often than not.

When looking from an accounting perspective a credit can either increase or decrease an account depending on the account type:

A credit will decrease Assets
A credit will increase Liabilities
A credit will increase Incomes or Revenues
A credit will decrease Expenses
A credit will increase Equity or Capital