Debt and credit accounting is the process of tracking accounts receivable (debts) and accounts payable (credits). This system helps businesses understand and analyze their obligations, income, expenses, liabilities, and assets. By keeping an accurate record of all transactions, companies can easily calculate profit or loss. In addition to accounting for financial obligations and transactions, debt and credit accounting can also be used to measure performance and manage cash flow. With this system in place, businesses can accurately assess their current financial health, set realistic goals, and make informed decisions to ensure the success of the organization.