Nature of accounts
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Anonymous
(Querist)
30 July 2011
What is the Nature of Debit Note and Credit Note,Who Will Issue the both?
30 July 2011
What is Debit Note?
A debit note is a document which debits the account of the party to whom it is sent. It shows the details of the amount with which the customer is debited. It is in the form of an invoice. The party who sends it becomes a creditor and the party to whom it is sent becomes a debtor.
Along with the defective goods, the buyer sends a debit note to the seller informing him that he has debited the seller's account with the amount of the goods returned. By sending the debit note, the buyer reduces his liability towards the seller. The usual contents of the Debit Notes are serial number, name and address of the sender (buyer), date of issue, name and address of the receiver (seller).
When Debit Note is Sent?
The debit note is sent in the following cases :-
1)On returning the goods, the buyer sends a debit note to the seller. The goods may be returned when they are defective, damaged, faulty or not according to the samples provided.
2)The seller may send it to the buyer when the buyer is charged less due to problems in calculation or omission of items in the invoice.
3)When the buyer is overcharged, he sends a debit note to the seller for effecting the necessary adjustment.
A debit note is a document which debits the account of the party to whom it is sent. It shows the details of the amount with which the customer is debited. It is in the form of an invoice. The party who sends it becomes a creditor and the party to whom it is sent becomes a debtor.
Along with the defective goods, the buyer sends a debit note to the seller informing him that he has debited the seller's account with the amount of the goods returned. By sending the debit note, the buyer reduces his liability towards the seller. The usual contents of the Debit Notes are serial number, name and address of the sender (buyer), date of issue, name and address of the receiver (seller).
When Debit Note is Sent?
The debit note is sent in the following cases :-
1)On returning the goods, the buyer sends a debit note to the seller. The goods may be returned when they are defective, damaged, faulty or not according to the samples provided.
2)The seller may send it to the buyer when the buyer is charged less due to problems in calculation or omission of items in the invoice.
3)When the buyer is overcharged, he sends a debit note to the seller for effecting the necessary adjustment.
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30 July 2011
What is Credit Note?
Credit Note is a note sent by one party to another on crediting the account. The credit note may be required due to calculation mistakes in the invoice or problem with the goods supplied. The party who sends it becomes a debtor and the party to whom it is sent becomes the creditor.
When Credit Note is Sent?
The credit note is sent in the following instances :-
1)The seller sends it to the buyer on receipt of goods returned back by the buyer.
2)The buyer sends it to the seller when he has been undercharged.
3)The seller sends it to the buyer when he has overcharged the buyer.
Credit Note is a note sent by one party to another on crediting the account. The credit note may be required due to calculation mistakes in the invoice or problem with the goods supplied. The party who sends it becomes a debtor and the party to whom it is sent becomes the creditor.
When Credit Note is Sent?
The credit note is sent in the following instances :-
1)The seller sends it to the buyer on receipt of goods returned back by the buyer.
2)The buyer sends it to the seller when he has been undercharged.
3)The seller sends it to the buyer when he has overcharged the buyer.
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30 July 2011
Contents of Debit and Credit Notes:
The contents of debit and credit notes are :-
1)Name and address of both the parties, i.e. the one who is issuing and the other to whom it is issued.
2)Serial number and date of the note.
3)Reference to the invoice received earlier.
4)Reference of the goods received back or returned back.
5)Amount that is to be adjusted.
6)Signature of the party issuing the note.
It is to be noted that either party can send a note, once the mistakes are noticed or goods returned. The party receiving a particular note must acknowledge it by sending the opposite type of note.
Thus, debit and credit notes help in making necessary adjustments in the books of account.
The contents of debit and credit notes are :-
1)Name and address of both the parties, i.e. the one who is issuing and the other to whom it is issued.
2)Serial number and date of the note.
3)Reference to the invoice received earlier.
4)Reference of the goods received back or returned back.
5)Amount that is to be adjusted.
6)Signature of the party issuing the note.
It is to be noted that either party can send a note, once the mistakes are noticed or goods returned. The party receiving a particular note must acknowledge it by sending the opposite type of note.
Thus, debit and credit notes help in making necessary adjustments in the books of account.
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