What is credit note and debit note

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Querist : Anonymous

Querist : Anonymous (Querist)

23 October 2015 please explain

1) what is credit note & what is debit note
2) when are credit and debit notes issued

Amol S Joglekar

Amol S Joglekar (Expert)
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23 October 2015 Consider Purchases.
The consignment has arrived. Some goods are damaged and some are not as per P.O.
Issue Debit note the the person from whom you have bought the goods.

REverse of this...say in Sales... would be credit note.

ANKIT AGARWAL

ANKIT AGARWAL (Expert)
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24 October 2015 Very Simple - Read this story

Ram went to Shopperstop for shopping and buys a Shirt for Rs. 5000. His wife did not like it, so he went back to return it. Shopperstop did not return the shirt for money but instead issued a Credit Note of Rs. 5000 which could be exchanged for any other product at shoppershop in future.

NOTE - 1: Shoppershop Issued Credit Note to you-

IT IS AN ASSET FOR YOU AND A LIABILITY FOR SHOPPERSTOP

If you remember the above, just reverse one Terminology in the above statement and situation will reverse:

NOTE - 2: You Issue credit Note to Shopperstop - [we changed just one thing - Compared to Note - 1]

ASSET FOR SHOPPERSTOP & LIABILITY FOR YOU

Note - 3: Shoperstop issues a DEBIT Note to you - [we changed just one thing Compared to Note -1]

ASSET FOR SHOPPERSTOP & LIABILITY FOR YOU

Note - 4: You Issue DEBIT Note to Shopperstop - [we changed just one thing Compared to note-2]

IT IS AN ASSET FOR YOU AND A LIABILITY FOR SHOPPERSTOP

Do not memorize all of the above, just remember the story and 1st example - derive the rest wherever necessary.

Conclusion - 2 dimensions needs to be identified:
1. Who is the issuer - You or Shopperstop
2. What is being issued - Debit note or credit note

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