This is true. In the official documentation Amazon states that a credit covers the usage expenses accrued after the moment the credit was redeemed until the end of the current month, but in reality the time-frame of the credit's effect is the entire current month so it indeed can retroactively cover expenses accrued before the credit was applied.

That's how it works most of the time but not always. Several times I have personally seen a situation when nothing happened to the account (no Amazon's action has taken place nor any other unusual event happened) and yet a real dollar bill somehow occurred out of nowhere in the middle of the month even though there was enough unused credit and no matter how many more new credit codes I applied it just didn't make the real-money bill go away. I am not sure what the cause is but it seems to be related to the consolidated billing feature. The Billing info is updated 3 times a day so after you apply the credit you have to wait up to 8 hours to see whether it made any difference. Sometimes I use some cheap $40 or $50 credit code just to check that applying additional credit would actually work and I wouldn't be just wasting the codes.