DEFINITION of Credit Ticket
In accounting and bookkeeping, a credit ticket is a transaction that generates a credit in the general ledger. An example of a credit ticket would be a deposit in a bank account which would produce a credit on the general ledger. This can be contrasted with a debit ticket, which records a liability or withdrawal.
A credit ticket is often used as a placeholder on the accounting books of a firm or individual. Usually, a corresponding debit item will be received in the near future to cancel the credit so that the books can balance. This process is a key part of the practice of double entry bookkeeping employed by most capitalist firms around the world.
The credit-ticket system may un-relatedly refer to a form of emigration prevalent in the mid to late nineteenth century, in which brokers advanced the cost of the passage to workers to settle in a new country.
BREAKING DOWN Credit Ticket
A credit ticket is an accounting entry that indicates money (or assets) received and thus increases the balance of the general ledger. In accounting and bookkeeping, a credit ticket is a transaction in the general ledger that adds money to the account. When payment is made a corresponding debit would be entered to cancel the credit. In the past, credit tickets may have been produced as physical documents or paper tickets until the canceling debit ticket arrived to balance the books. Today, such credit placeholders are represented electronically using accounting software and digital ledgers.
Credit tickets will typically have offsetting debit tickets, either simultaneously or in the very near future. The deposit in the bank account, for example, could be a payment for the sale of goods, and the offsetting debit would be in accounts receivable.
As another example, a regional bank may take a deposit from customers in the amount of $200. A credit ticket is placed on the books of the bank on the customer's behalf (the deposit is actually considered a liability for the bank, since it owes the depositor the funds if demanded). When the bank makes a loan to somebody else, say in the exact same amount of $200, a debit ticket is entered which cancels the credit ticket (the loan is considered an asset for the bank since it is owed money from the borrower).