From a customer's point of view, what is the difference between credit and debit in a bank account?

Introduction / Context:
The terms debit and credit can be confusing because their effect depends on whose books you are looking at. Banks keep their own ledger, while customers look at their passbooks or online statements. From the bank's point of view, customer deposits are liabilities, but from the customer's point of view, the bank account is an asset. This question focuses specifically on the customer's perspective and asks how credit and debit entries affect the balance shown in the customer's bank account.

Given Data / Assumptions:
- The perspective specified is the customer's point of view. - The context is a bank account operated by the customer. - Options describe different possible effects of credit and debit entries on the customer's balance. - We assume a typical savings or current account statement as viewed by the customer.

Concept / Approach:
From the customer's perspective, the balance shown in the bank account represents money owed by the bank to the customer, so it is an asset for the customer. When money is deposited into the account, the balance increases. On the customer's statement, such an increase is usually shown as a credit. When money is withdrawn, paid out or charged as bank fees, the balance decreases, and these amounts appear as debit entries. On the bank's own books the effect is reversed, because customer deposits increase a liability. However, the question is clearly asking about the customer's point of view, so we must focus on how entries appear on the customer's statement, where credit means addition and debit means reduction of balance.

Step-by-Step Solution:
Step 1: Fix the perspective as the customer's, not the bank's. Imagine looking at your personal bank account statement. Step 2: Recall that when your salary is credited, the balance in your account goes up. This shows that a credit entry increases the customer's balance. Step 3: Remember that when you withdraw cash, issue a cheque or make a card payment, the transaction is shown as a debit and the balance comes down. So a debit entry decreases the customer's balance. Step 4: Compare each option and select the one that states that credit increases and debit decreases the balance from the customer's point of view.

Verification / Alternative Check:
Reviewing an actual bank statement is a good verification method. The column heading often says credit for incoming funds and debit for outgoings. You will see that credits add to the balance and debits reduce it. Textbooks explaining bank reconciliation from the customer's perspective also confirm this treatment. This alignment between real life statements and theory confirms that the correct answer is the option where credit increases and debit decreases the balance in the customer's account.

Why Other Options Are Wrong:
Credit entry decreases and debit increases: This inverts the customer's perspective and would only make sense on the bank's own ledger, not on the customer's statement. Both credit and debit increase the balance: This is impossible because withdrawals and charges must reduce the account balance. Both credit and debit decrease the balance: This is also impossible, as deposits and salary credits clearly raise the account balance.

Common Pitfalls:
A major source of confusion is mixing up the bank's books with the customer's records. In double entry terms, the bank treats customer deposits as liabilities, so an increase is a credit in its ledger. From the customer's point of view, however, the same transaction is a debit to their cash at bank account. When answering exam questions, always read whether the perspective is the bank's or the customer's. Here the question clearly states customer's point of view, so credit increases and debit decreases the balance as shown on the bank statement.

Final Answer:
The correct option is For a customer, a credit entry increases the balance and a debit entry decreases the balance in the bank account, because this reflects how transactions appear and affect the balance from the customer's perspective.