Executive Accounts Question:
Tell me what does the word credit mean in terms of accounting?
Answer:
The word "credit" is part of the equation of double entry bookkeeping.
In order for bookkeeping entries to balance, there must always be a debit (left side, abbreviated by "dr") and credit (right side, abbreviated by "cr") entry that equal one another.
For example, to record an Office Supply Store purchase (on account ~ a payable), the entry would be:
Office Supplies Exp $500.00(dr)
Accounts Payable $500.00(cr)
If an entry does not balance the totals for debits and credits, your books will be out of balance.
In order for bookkeeping entries to balance, there must always be a debit (left side, abbreviated by "dr") and credit (right side, abbreviated by "cr") entry that equal one another.
For example, to record an Office Supply Store purchase (on account ~ a payable), the entry would be:
Office Supplies Exp $500.00(dr)
Accounts Payable $500.00(cr)
If an entry does not balance the totals for debits and credits, your books will be out of balance.