What Is Debit Note and Credit Note: here we are providing complete details for Debit Note and Credit Note. during this article you’ll find all details associated with Debit Note and Credit Note like Meaning or definition of debit note, once we issued debit note. Definition or meaning of Credit Note, When a credit note is issued etc.What Is Debit Note and Credit Note
What is a debit note ?
Debit note may be a document issued by the purchaser of products to the vendor . Usually it takes place in returning the products that are purchased on credit basis.Debit note consists of the many details about the products returned. Like total number of quantity and price , any trade discounts , special discounts allowed at the time of purchase.
From accounting point of view Debit note indicates that the account of the party to whom it’s being issued ,is debited within the books of the sender of debit note. Debit note is employed for reducing the receivables that we’ve to urge from any party like our debtors.When Debit Note is issued ?
When a customer is overcharged by the seller or his creditor then to offer effect for an equivalent in his books, customer will send the Debit note to vendor / creditor.
Customer sends a debit note when he returns the products .
Seller will send a debit note when he undercharges the customer…
Accounting entries :
1.When a debit note is shipped by a customer to his vendor returning the products he has purchased from the seller .
In the books of customer (purchaser) :
Supplier (creditor) A/c…………….Dr
To Purchase returns A/c.
In the books of vendor / supplier. :
Sales returns A/c …………….Dr
To Customer (Debtor) A/c.
Credit Note :
Credit note may be a note sent by the vendor / Supplier acknowledging that he has received the products returned by the customer.
Credit note indicates that the account of the party to whom it’s issued , is credited within the books of accounts of the party by whom it’s issued.(Supplier).
When A Credit note is issued ?
1.When a seller overcharges the customer / buyer then he sends a credit note crediting the account of customer in his accounts.
2.When a customer is undercharged then he will send a credit note to the supplier crediting the account of supplier in his accounts
.3.On receiving the products on sales returns Seller will issue a credit note to buyer.
Accounting entries :
Accounting treatment is as same as stated in above paragraph. except for better interpretation we will check out that from seller’s point of view.
