Credit is a term used to describe a financial agreement in which one party (the creditor) provides money, goods or services to another party (the debtor) in exchange for future payment of the funds plus interest. A Liability Account refers to an account that represents an obligation owed by one business entity to another. This includes things such as accounts payable, wages and salaries, taxes, and other debts. In short, Credit A Liability Account is an arrangement under which a business entity provides money, goods or services to another business entity on the condition that they will pay the amount back at some point in the future, along with an additional sum as interest.