"Credit" is used to indicate deposit, income or increase the balance of an account, which will increase the balance of a liability or owner's equity account or decrease the balance of an asset account.
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The difference between debt and credit: difference 1: meaning and direction of operation Debt: indicates the expenditure or decrease of funds, which is negative in the account and is usually used to record expenditure, withdrawal, etc. Example 1: I made a $50 debt transaction at the grocery store. )
Example 2: Debit entries in the account reflect the withdrawal of funds. (The debit record in the account reflects the withdrawal of funds. )
Credit: indicates the income or increase of funds, which is positive in the account, and is usually used to record deposits, income, etc. Example 1: On the 5th of every month, his salary is credited to his bank account. His salary is deposited in his bank account on the 5th of every month. )
Example 2: The company received a refund of 1000 USD. (The company received a refund of 1000 USD. )
Difference 2: Debit: Debit is usually located on the left side of accounting books, indicating the outflow or decrease of funds. Example 1: Debit entries should be recorded on the left side of the ledger. (Debit records should be recorded on the left side of the account book. )
Example 2: Debit the purchase of office supplies to the operating expenses account. (The purchase of office supplies is credited to the operating expenses account. )
Credit: In accounting books, the credit is usually located on the right, indicating the inflow or increase of funds. Example 1: The credit entry of sales revenue should be recorded on the right side of the ledger. )
Example 2: Payments received from customers are recorded in accounts receivable. )
Difference 3: Debit of account balance: In an account, the debit balance represents a negative value, indicating that expenditure is greater than income or funds are reduced. Example 1: After paying the bill, the debt balance in my account increased. After paying the bill, the debit balance in my account increased. )
Example 2: The debt balance in the cash account indicates the overdraft situation. (Debit balance of cash account indicates overdraft. )
Credit: In an account, the credit balance is positive, indicating that income is greater than expenditure or capital increase. Example 1: Together with the recent deposit, the credit balance in her account reached $500. After the recent deposit, the credit balance in her account reached $500. )
Ex. 2: The balance of the savings account has increased steadily with the passage of time. )
Difference 4: Influence account type Debit: usually associated with assets (such as cash, deposits, etc.). ) and expenses (such as fees, costs, etc.). ) account. Example 1: Debit the cash account for purchasing equipment. )
Example 2: Debit the statistical expenses for the purchase of office supplies. )
Credit: usually related to liabilities (such as loans and accounts payable) and owners' equity (such as capital and income) accounts. Example 1: credit the loan amount to the loan payable account. )
Example 2: Enter the net income of the company into the owner's equity account. )