Crédits for interest earned

[AcctAdam]

I am studying accounting. In the book thère is this sentence:
Checking account may earn interest. At month-end, this interest is credited to thé depositor's account and reported in the bank statement.

Why did they write credited? They credited the assets of thé bank and debited the assets of thé one who has an account at thé bank?


What about this sentence?
When checks from customers are deposited, the bank generally gives the depositor immediate credit.

Here credit has a différent definiton than thé debit/Crédit definition, i think. Can credit also mean just cash or cash equivalent.

 

[kirby]

In bank terminology, when the bank puts money in your account, they say they "credited" your account.
Since you now have more money (from interest in your example) you DR Cash and CR Interest Income
And when they reduce the money in your account, they say they "debited" your account. Your entry is DR ( for example an expense acct) and CR Cash.

For banks when referring to a bank account , their word "credit" means just cash.

 

[Steve-LevelUp]

Kirby is right here. Think it terms of their accounting department. For them, your bank account is credited for interest because for them, your bank account is a liability. So, increasing their liability (by increasing your bank balance) is a credit entry.

That might help when thinking about banking terminology vs accounting terminology.

 

[AcctAdam]

thx guys.
I am going to print this thread and put it on my desk or scotch it somewhere in my room.