8 mo (edited)
1 Min Read
This is a function of accounting where the ledger is altered based upon the impact of transactions. A credit cannot operate without a debit and vice versa. Debits and credits must always equal out.
On the balance sheet, debits are always on the left whereas credits are recorded on the right.
Credits decrease asset or expense accounts while increasing liabilities.
From the overall balance sheet perspective:
Credits = less assets, more liability and equity
Credit also describes the loan process. When a company is acquiring debt in such a fashion, it is using credit to get more money. Corporations often turn to the credit market for financing.
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