What is a Credit in Accounting?

A credit is an accounting entry that either increases a liability or equity account, or decreases an asset or expense account. It is positioned to the right in an accounting entry. A credit is recorded on the right side of a T account.

What is a Credit in Finance?

A credit also refers to a delayed payment arrangement. For example, a customer is granted $10,000 of credit on 30 day terms, which means that the customer can make purchases of up to $10,000 without having to pay the seller until 30 days have passed. This provides a substantial benefit to the customer, which has the opportunity to sell the acquired goods at a markup and use the collected funds to pay back the seller without using any of its own cash to fund the transaction.

Basic Accounting Concepts

Debits and Credits

Double Entry Accounting

Financial Accounting Basics

The Steps in the Accounting Process