What happens during a credit or return transaction?

In a credit or return transaction, the process involves returning funds to the cardholder after a purchase has been reversed due to reasons such as a return of goods or a charge posted in error. When this transaction occurs, the amount that was originally charged is effectively added back, reinstating the available credit to the cardholder's account. This action helps in adjusting the cardholder's line of credit, allowing them to utilize those funds for future purchases.

This understanding underlines the importance of maintaining accurate records and understanding the flow of money during these transactions. Credit transactions act to balance the financial activities of both the merchant and the cardholder, ensuring that both parties have clear and responsible management of their funds. The correct answer effectively encapsulates the essence of how credits and returns function within the framework of financial transactions.