Building debit or credit is a key business tool that helps to track and optimize a company’s financial well-being. It’s a simple concept: each time a financial transaction takes place, it is either debited (taken away from) or credited (added to) an account. This in turn creates a “net” balance—the amount of money that is owed or owned. For example, if you purchase a laptop computer for $600, this would be “debited” from your account. On the other hand, if someone pays you back for the purchase, this amount would be “credited” to your account, resulting in a net balance of $0. By regularly tracking exchange transactions with gains and losses, businesses can easily manage their cash flow and make sure they are keeping healthy financial records.
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