Credit note
This query is : Resolved
A D - Loving Life
(Querist)
01 December 2008
What does credit note means?
Deepak Agrawal
(Expert)
01 December 2008
Credit note means a memo issued to a party to whom we have credited. It may be creditor or debtor...
01 December 2008
Debit Note:
a. In case of Purchase returns, the purchaser will issue a debit note to the suppliers so that the suppliers account is debited on issue of debit note
b. This type of note can also be issued in case of overcharge by suppliers (practically)
Credit Note:
a. In case of Sales returns, the seller will issue a credit note to the purchaser
b. The purchaser account is credited on issue of credit note
Abstract: In case of credit purchases [assume Rs.1000 worth goods], journal entry will be "Purchases Dr. and Creditor Cr." for Rs.1000. So we are crediting the account of creditor indicating that we have to pay Rs.1000 to our creditor. At the time of purchase return [say Rs.200], we have to debit the account of creditor indicating that we need not pay Rs.1000. We have to pay finally Rs.800 only.
Hope you understood. Extend the same logic for Credit note also. Credit note will be from Seller point of view and Debit note from purchaser point of view
a. In case of Purchase returns, the purchaser will issue a debit note to the suppliers so that the suppliers account is debited on issue of debit note
b. This type of note can also be issued in case of overcharge by suppliers (practically)
Credit Note:
a. In case of Sales returns, the seller will issue a credit note to the purchaser
b. The purchaser account is credited on issue of credit note
Abstract: In case of credit purchases [assume Rs.1000 worth goods], journal entry will be "Purchases Dr. and Creditor Cr." for Rs.1000. So we are crediting the account of creditor indicating that we have to pay Rs.1000 to our creditor. At the time of purchase return [say Rs.200], we have to debit the account of creditor indicating that we need not pay Rs.1000. We have to pay finally Rs.800 only.
Hope you understood. Extend the same logic for Credit note also. Credit note will be from Seller point of view and Debit note from purchaser point of view
02 December 2008
Credit Note is a memo issued to the opposite party giving details of sum credited to the party's account. For example Supplier will issue a Credit Note to its Customer for the goods returned by the customer. On the other hand, Debit Note gives the details of debits. Credit Note issued by one party(supplier in the above example) is a Debit Note issued by the other party(customer in the above example).
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