Credits are used to record an increase of assets or a decrease in liabilities. They also represent money that a business owes to its customers, suppliers, and other parties such as banks or the government. This can be done either with a physical journal entry or through digital records stored on a computer or cloud network.
Credits allow businesses to track payments made and received, track expenses, and balance their accounts. By using credits, businesses are able to manage their financials more efficiently and accurately. Furthermore, it allows for easy retrieval of financial information in case of an audit. Ultimately, credits are used to allow businesses to make informed decisions about how to manage their resources effectively and efficiently.