What do credits represent on the right side of a T account?

In accounting, T accounts are used to visualize the debits and credits associated with individual accounts. The right side of a T account is designated for credits. In this context, credits typically represent increases in liabilities and equity.

When you credit a liability account, you are increasing the amount that the business owes, such as loans or accounts payable. In terms of equity, crediting an equity account reflects an increase in the owners' claim on the business, such as retained earnings or additional investments made by the owners.

Revenue is also credited, but it is considered part of equity in the broader sense since it ultimately affects the equity section of the balance sheet. Therefore, when thinking about what credits represent specifically on the right side of a T account, recognizing that they encompass liabilities and equity provides a more comprehensive understanding.

Assets, on the other hand, typically increase with debits and decrease with credits, which clarifies why they are not represented by credits on the right side of a T account.