Define credit

Expert Solution

CREDIT

The ability of a customer to obtain goods or services before payment , based on the trust that payment will be made in the future.

IT means a person buys a goods or avail services from other without making a payment upfront or by making only part payment , full or balance payment will be paid on futre dates.

for ex if x purchased a motorcycle from abc ltd on credit and if the terms is x will make payment after 45 days, we can say that x purchased motorcycle on credit basis.

entry in books of x will be

MOTOR CYCLE A/C DR

TO ABC LTD.

CREDITORS / TRADE PAYABLES ALL FIGURES ARE RELATING TO CREDIT TAKEN BY AN ENTITY FROM VARIOUS PERSONS ETC , IN FINAL ACCOUNT I E BALANCE SHEET THESE ITEMS ARE PRESENTED IN RIGHT SIDE .

THE MONEY LENT OR BORROWED UNDER CREDIT ARRANGEMENT .

as far as accounts is concerned credit means as per above .

however public acknowledgement or praise , given or received when a persons responsibility for an action or ideas becomes apparent is also a credit , but in accounts we are not concerned wih this credit.

ekkarill92 answered 1 year ago

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