Credit

CR Full Form in English, letter by letter

CR is short for Credit, the right-hand entry in bookkeeping and the mark for money added to an account on a bank statement.

CR Full Form in Indian Languages

Every bank statement and commerce textbook in India carries the pair Dr and Cr, and CR is the short form of Credit.

Credit in double-entry bookkeeping

CR full form is Credit. Every Indian ledger, from a kirana shop's khata to a listed company's books, runs on double-entry bookkeeping. Each transaction is recorded twice, once as a debit (Dr) and once as a credit (Cr) of the same amount, so total debits always equal total credits. A trial balance that does not tally tells you at once that an entry was missed or posted wrongly.

A credit is the right-hand side of an account. It increases liabilities, capital and income, and it reduces assets and expenses. Sell goods for ₹5,000 in cash and the books show Cash debited by ₹5,000 and Sales credited by ₹5,000. Buy goods worth ₹20,000 from a supplier on credit and Purchases is debited while the supplier's account is credited, because you now owe that money.

Students learn the three golden rules for deciding which side an entry goes on. For personal accounts, debit the receiver and credit the giver. For real accounts, debit what comes in and credit what goes out. For nominal accounts, debit expenses and losses and credit incomes and gains. These rules are tested in Class 11 and 12 accountancy, B.Com papers and the CA Foundation exam.

Reading Cr on a bank statement

On a savings account statement, a Cr entry is money that came into your account: salary, a UPI payment received, a cheque deposit, interest. A Dr entry is money that left, such as an ATM withdrawal or an EMI. The bank records your deposit as something it owes you, which is why the bank's own books show it on the credit side.

Many statements also print Cr or Dr after the closing balance. A balance of ₹12,450.00 Cr means your account holds that much money. A balance marked Dr means the account is overdrawn, which is normal for an overdraft or a cash-credit account and a warning sign on a savings account.

Credit card statements flip the feel of the letters. Your purchases appear as debits and the amount you owe is the balance due. A Cr beside an amount means money moved in your favour, such as a payment you made or a refund for a returned item, and it reduces what you owe. A Cr on a loan statement is usually an EMI or part-payment received.

Credit note, credit score and credit period

In business, a credit note is a document a seller issues to reduce the amount a buyer owes, after goods are returned or a rate is revised. Under GST a supplier issues a credit note against the original tax invoice and adjusts the tax liability accordingly. The matching document from the buyer's side is a debit note.

A credit score is a different idea that shares the word. Bureaus such as CIBIL rate your repayment history on a scale of 300 to 900, and lenders generally look for 750 or above before offering their best interest rates on a home or personal loan. A Cr entry on your statement has no effect on this score.

Credit period is the time a supplier allows before payment is due, commonly 30, 45 or 60 days in trade. Buying on credit means you pay later; it does not mean the purchase is free.

Cr as crore, and other meanings

In property and business talk, cr is the written short form of crore. One crore is 100 lakh, or 10,000,000, which Indians write as ₹1,00,00,000. A flat priced at ₹2.5 cr costs two and a half crore rupees, and a company with ₹500 cr turnover sells goods worth five hundred crore a year. The rupee sign and the topic make it obvious that no accounting entry is involved.

Cr is also the chemical symbol for chromium, element number 24 in the periodic table. On Indian Railways, CR is the code for the Central Railway zone, headquartered at Mumbai CSMT, which you will see in timetables and railway notices. Every one of these readings is clear from the surrounding words.

Mistakes beginners make with Dr and Cr

The commonest error is treating debit as bad and credit as good. A credit to the sales account is revenue earned. A credit to a loan account is more debt taken. Debit and credit describe the side of an entry, not whether the result is favourable.

A second trap is the bank's point of view. When a bank says it has credited your account, its liability to you has gone up, so your balance rises. The same event in your own cash book is a debit to the bank account. Keep track of whose books you are reading before deciding which side an entry belongs on.

A third slip is posting an entry on one side only. Always ask what the other account is. If you cannot name it, the entry is incomplete and the trial balance will not agree.

Dr and Cr only look confusing until you decide whose books you are reading. Do that first, name both accounts in every entry, and statements, ledgers and credit notes read the same way.

CR Full Form: Common Questions