Final answer:
In accounting, a credit is recorded on the right side of a T-account and can increase or decrease an account depending on its type. Credits usually increase liabilities, equity, and revenue accounts, and decrease asset and expense accounts. A bank's T-account features assets on the left and liabilities plus net worth on the right, ensuring balance.
Step-by-step explanation:
The student's question is related to how credit affects various types of accounts in accounting. In a T-account, which is a visual representation of a ledger account, credits and debits are used to record transactions. Credits do not always increase or decrease an account; instead, their effect depends on the type of account. A credit typically increases liability, equity, and revenue accounts but decreases asset and expense accounts. Conversely, a debit increases asset and expense accounts but decreases liability, equity, and revenue accounts.
The right side of a T-account is where credits are recorded, while the left side is reserved for debits. When considering a bank's T-account, the assets of the bank include reserves, loans made, and securities purchased, which are recorded on the left side. Liabilities, like customer deposits, and net worth are recorded on the right side, where a credit to liabilities would increase what the bank owes to its depositors. Importantly, the net worth of a bank is calculated by subtracting total liabilities from total assets and is also listed on the right side to ensure that the account balances.