CREDIT ENTRY Meaning and
Definition
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A credit entry refers to a financial transaction recorded on the right-hand side of an accounting ledger or balance sheet. In double-entry bookkeeping, a credit entry represents an increase in liabilities, owner's equity, or revenue, or a decrease in assets or expenses.
When a credit entry is made, it typically entails recording the amount of money owed by the business to another party. For instance, when a company borrows money from a bank, a credit entry is made to increase the liability account, reflecting the amount owed. Similarly, when a customer pays for products or services on credit, a credit entry is recorded to increase the accounts receivable, indicating the amount of money the customer owes to the business.
Credit entries are essential for accurately tracking financial transactions and maintaining balance in the accounting system. In double-entry bookkeeping, every credit entry must be accompanied by a corresponding debit entry to ensure that the books remain balanced. This means that while a credit entry increases certain accounts, a corresponding debit entry must be made to balance the equation.
Overall, credit entries are crucial for recording and tracking the financial activities and obligations of a business, helping in the preparation of financial statements, such as the balance sheet and income statement.
Common Misspellings for CREDIT ENTRY
- xredit entry
- vredit entry
- fredit entry
- dredit entry
- ceedit entry
- cdedit entry
- cfedit entry
- ctedit entry
- c5edit entry
- c4edit entry
- crwdit entry
- crsdit entry
- crddit entry
- crrdit entry
- cr4dit entry
- cr3dit entry
- cresit entry
- crexit entry
- crecit entry
Etymology of CREDIT ENTRY
The word "credit" comes from the Latin word "credere", which means "to believe" or "to trust". In its financial context, "credit" refers to the trust that a lender has in a borrower to repay a debt.
The word "entry" originally derives from the Old French word "entree", which means "a coming in" or "an arrival". In the context of accounting and bookkeeping, an entry refers to a record of a financial transaction that is recorded in a book or ledger.
Therefore, the term "credit entry" combines these two concepts. It refers to the recording of a financial transaction where an amount is credited to an account as a result of an increase in assets, revenue, or owner's equity.
Similar spelling words for CREDIT ENTRY
- credit order,
- credit system,
- creditably,
- creditworthy,
- credit line,
- credit side,
- credit union,
- credit hour,
- creditable,
- credit analyst,
- Crediting,
- graduate entry,
- under graduate,
- credit account,
- credit card.
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