In a guest folio, what is the effect of a credit entry on the outstanding balance?

In a guest folio, what is the effect of a credit entry on the outstanding balance?

• A. It increases the outstanding balance
• B. It decreases the outstanding balance
• C. It has no effect
• D. It closes the folio

Answer: (A)

In guest folio accounting, a credit entry reduces the amount the guest still owes. Credits come from payments, refunds, or adjustments posted to the account, so they lower the outstanding balance. For example, if there are $150 in charges and a $50 payment is posted as a credit, the balance due becomes $100. If credits exceed charges, a credit balance may appear, showing an overpayment. A credit entry does not close the folio; closing occurs after checkout when the balance is settled.

In guest folio accounting, a credit entry reduces the amount the guest still owes. Credits come from payments, refunds, or adjustments posted to the account, so they lower the outstanding balance. For example, if there are $150 in charges and a $50 payment is posted as a credit, the balance due becomes $100. If credits exceed charges, a credit balance may appear, showing an overpayment. A credit entry does not close the folio; closing occurs after checkout when the balance is settled.