The word credit is derived from the Latin word Credo. The word credo means "I trust you". It is defined by Gide as" an exchange which is complete after the expiry of a certain period of time after payment. Credit is explained as the sale of goods and services and money claims in the present in return for a promise to pay in the future. The promise usually based on the confidence and on the belief that the debtor whether a person, a business firm or a government unit will be able and willing to pay on demand or at some future time. Credit therefore is defined in the following words. Credit is the right to receive payment or the obligation to make payment on demand or at some future time on account of an immediate transfer of goods.
The first phrase right to receive payment is used from the point of view of the creditor as he is to exchange present goods for the right to receive payment in future. The second an obligation to make payment on demand is the phrase from debtor's point of view. The debtor has an obligation to pay in the future for goods acquired. Credit and debt are thus two sides of the same shield.
The first phrase right to receive payment is used from the point of view of the creditor as he is to exchange present goods for the right to receive payment in future. The second an obligation to make payment on demand is the phrase from debtor's point of view. The debtor has an obligation to pay in the future for goods acquired. Credit and debt are thus two sides of the same shield.
