What is a line of credit loans?

Meaning of credited

A credit line, also known as a line of credit (LOC), is a type of standing loan that allows individuals, businesses, or other organizations to borrow cash when they need it, repay what they have borrowed, and continue borrowing without applying for a new loan.

A line of credit is also sometimes referred to as an evergreen loan.

,A credit line can come in various forms, including a credit card, home equity line of credit (HELOC), or a small business credit line.

,These loans often make it possible to co.



Your account has been credited message

Accounting major here - assets to you are credited - as in shown on the right column on a two-column balance sheet - rather than debited - as in shown on the left column.

The bank is using accounting terminology and credits are shown on the right and debits (outflow from your account) are shown on the left.

Credited and debited meaning

I think if you think in terms of increasing or decreasing, youll be better off than thinking in terms of left or right.

,There are only five broad categories you need to grasp.

,,Assets,Liabilities,Shareholders (aka Owners) Equity,Revenue,Expenses,nA debit (DR) isnt always increasing.

A credit (CR) isnt always decreasing.

Dont think of it in these terms, but rather in the context of the five categories above.

,Debits will always increase for Assets and Expenses.

Credits have the opposite effect.

,Credits will always increase for Liabilities, Shareholders Equity and Revenue.

Debits will have the opposite effect.

,Lets go over a few simple examples.

,Example 1: You incur a rent expense (but dont yet pay it).

,The journal entry would be to:,DR Rent ExpensenCR Accounts Payable,Your rent (expense) just increased and you incurred a simultaneous accounts payable (liability).

,Example 2: Now, you pay that liability with cash.

,The journal entry would be to:,DR Accounts PayablenCR Cash,Your cash (asset) decreased and you accounts payable (liability) also decreased.

,Example 3: You make a sale (on account).

,The journal entry would be to:,DR Accounts ReceivablenCR Sales,Your accounts receivable (asset) increased and your sales (revenue) increased.

,Example 4:Now the customer paid you for that receivable amount,The journal entry would be to:,DR CashnCR Accounts Receivable,Your cash (asset) increased, and your accounts receivable (asset) decreased.

In this particular case, you debited and credit an asset so there no change to assets.

The receivable was simply replaced with the cash payment.

,So in summary, if you think in terms of increase and decrease, combined with the aforementioned major categories, I think youll develop a stronger grasp of debits and credits.

,Hope that helps.

Why do banks credit your account

When you deposit the money in your deposit / liability account, it is surely a debit for the bank.

,However as the message is meant for you (meaning depositor), the language used is the one understood by the depositor - that the money has been credited in depositors account.

Debit meaning

You are totally right!,Although, if you said the opposite, I could say the same:,Debit means increase in assets, so an increase in the resources you own.

If you debit a liability account - this will mean you owe less to somebody - meaning that you have more for yourself.

,Credit is a decrease in assets, e.


when your computer is worth less and less, because itu2019s getting old (i.


it depreciates), or an increase in liabilities, e.


when you take a loan from a bank.

,Moreover, you always have to think two ways:,If you buy a second-hand car for cash you will have a debit in the car account (you have more cars!) and a credit in your cash account (your wallet is not as thick).

,You might have borrowed the money from your in-laws, so you had a debit on your cash account for a while (they gave you the dollars) and a credit on the u2018in-lawsu2019 account (the money was not at all yours).

,Now, itu2019s the time to introduce you to one more challenge: the profit and loss accounts work the opposite way.

Credit is a gain (business is going good!) and debit is a loss (you spent money, hopefully on something reasonable.

,After a year, the car you bought depreciated - you wonu2019t be able to sell it for as much as you bought it.

Thus, you have less in the u2018caru2019 account (a credit - you own less) and by the way suffered a loss.

There was no direct liability, but you need to make an opposite booking - have a debit on your Profit and Loss and lower your score for the year.

,As you can see, all the bookings flow in a stream - from one account to another - and there is always a balance.

,I tend to start thinking about the bookings starting from what I own (more or less) and thus note the increase or decrease in assets first.

Then, I just follow with the opposites.

,You might as well use the cheat sheet below or make a connection with your own bank account: u2018debitu2019 card is used to access your own resources, while a u2018creditu2019 card makes you spend first and repay later on.

,by dummies - Learning Made EasyP.


to make things simple, treat equities as another form of liabilities.

If your parents give you money, you donu2019t have to repay, but still owe them something.

Credited against meaning

It really should be credited to your account, or perhaps credited against your debit account.

The point is that the individual transaction will not be settled immediately, but taken into account together with others in striking a balance for the future.