A credit balance on a ledger account indicates?


Question: A credit balance on a ledger account indicates?

A credit balance on a ledger account typically indicates that a company has received money or benefits, which could be from sales, income, or other forms of revenue. It can also represent a decrease in liabilities, such as when a debt is paid off or a reduction in expenses. In double-entry bookkeeping, credits are recorded on the right side and are balanced against debits on the left, ensuring that the accounting equation remains in equilibrium. It's essential to understand the context of the account type to interpret a credit balance correctly.

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