Credits and Debits are the fundamental components of accounting and financial recordkeeping. In its most basic definition, credits represent revenue or income for a business, while debits represent expenses. When recording transactions in a company’s books, there must be an equal amount of credits and debits—in other words, money either comes in (credit) or it goes out (debit). For example, if a business purchases $1,000 worth of supplies on credit, their books would reflect a $1,000 debit to the Supplies account and a $1,000 credit to the Accounts Payable account. This is how companies keep track of how much they owe and how much they are owed. Credits and debits are essential for understanding a company’s finances and keeping accurate financial statements.