What is the definition of 'credit' in a financial context?

What is the definition of 'credit' in a financial context?

• A. Withdrawal from your account
• B. Deposit into your account
• C. Transaction voided
• D. Transfer to another account

Answer: (B)

In a financial context, 'credit' refers to a deposit into an account, which increases the overall balance. This can occur when money is added to an account, such as through a paycheck, a transfer from another account, or any other form of payment made into the account. The concept of credit is essential in understanding how money flows within various financial systems, as it directly affects an individual's net worth and available funds for spending or investment.

The other options concern actions that are not related to the definition of credit in finance. A withdrawal from an account decreases the balance, while a voided transaction refers to canceling a transaction before it is completed, which does not involve any addition of funds. Similarly, a transfer to another account could result in a credit to one account but might be interpreted as a debit (or withdrawal) from the originating account, thus not capturing the essence of what constitutes 'credit' itself in isolation.