What is credit and debit?
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Credit and debit are terms commonly used in the context of financial transactions. When we talk about credit, it typically refers to an increase in funds or an entry that adds to an account balance. For example, when you make a deposit into your bank account, it increases your account balance, and that is considered a credit.
On the other hand, debit refers to a decrease in funds or an entry that subtracts from an account balance. When you make a withdrawal from your bank account or make a purchase using your debit card, it reduces your account balance, and that is considered a debit.
In simpler terms, credit means adding money or increasing a balance, while debit means subtracting money or decreasing a balance. It’s important to keep track of your credits and debits to manage your finances effectively.
A debit entry in an account represents a transfer of value to that account, and a credit entry represents a transfer from the account. Each transaction transfers value from credited accounts to debited accounts.