The word ‘Credit’ is derived from the Latin word ‘Credo’ which means “I trust you”.
It is define as, “An exchange which is complete after the expiry of a certain period of time after payment”. i.e.
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.
The creditor is to exchange present goods for the right to receive payments in the future.