Equity represents wealth. On a corporate balance sheet there is an account called Stockholders’ Equity and it represents the wealth of all company stockholders that has been accumulated across the life of the business.

When we hear the phrase that our account has been credited, we see that as a good thing. It represents an expression that our worth has been increased. In the practice of accounting, a corporation’s Stockholders’ Equity account on its balance sheet is increased when we book a credit to that account.  Further, the Stockholders’ Equity account represents an amount that belongs to all company stockholders proportionate to the number of shares held by each owner. Shareholders increase in equity, or wealth, when their collective account, namely Stockholders’ Equity, is credited through an accounting book-keeping entry.

Debits and credits are made in accounting to increase and decrease account balances. A debit entry to Stockholders’ Equity reduces the wealth of stockholders while a credit increases their recorded wealth.

I’ve pondered the origin of the phrase “credited your account.” Remember, it is used to describe an increase in one’s worth. It is interesting to consider a phrase used in the Old Testament of the Bible in reference to Abram (God later changed his name to Abraham). In Genesis 15:6, you will read “Abram believed the LORD and He (the LORD) credited it to him (Abram) as righteousness.” (New International Version)

God promised Abram, who was very old and without children that Abram would father a son and that God would give Abram descendants as numerous as the stars in the sky.  Abram responded by believing what God told him and God credited righteousness to Abram. By so doing God enlarged Abram’s spiritual equity immeasurably.

To this day, we carry out the practice of crediting the Stockholders’ Equity account when the physical wealth (financial) of the person is increased in the corporation. As with Abram, God still credits the spiritual account today of the one who exercises faith in Him.