Bookkeeping

Credit

The right-hand side of an account. It is a position, not automatically money received.

01

Technical definition

The right side of an account or journal entry.

02

How it works

Credits increase liabilities, equity and revenue and decrease assets, expenses and distributions. Every credit is paired with one or more equal debits within the same entry.

03

Everyday example

A $5,000 owner contribution: debit Cash 5,000; credit Contributed Capital 5,000.

04

Common pitfall

Credit does not necessarily mean money received or a favorable event.