what do the different financial statements tell you about a company?

Question

Why does your bank statement show a credit for an increase in your cash balance?

Answer 1

Since the bank statement is sent by the bank, it is prepared from the bank's point of view. So if you have money in the bank, the bank treats you as a creditor, that's why in the bank statement a positive balance is a credit. On the other hand, if you've borrowed money from the bank, the bank treats you as a debtor and your bank statement would say the overdraft balance is a debit.

When you're preparing your own financial statements, you should of course prepare them from your own point of view, so if you have money in the bank, your cash a/c is a debit, and if you owe the bank an overdraft, your cash a/c is a credit.