Credits Decrease Assets and Increase Liabilities (CDAL) is a fundamental accounting concept that can help businesses understand the impacts of their financial decisions. At its most basic level, CDAL means that when a company or individual issues a credit, their assets decrease and their liabilities increase. This is because the liability (the debt) is now owed to the issuing entity and must be paid back in the future. This is why credits are typically seen as having a negative effect on a business’s balance sheet, as they are responsible for decreasing assets. At the same time, however, credits can also improve a company’s cash flow and liquidity as debt is often easier to manage than assets. Ultimately, CDAL is an important concept to understand in order to maintain financial stability and ensure long-term success.