What is debit note and credit note

Question

Accepted Answer

Debit note and credit note are accounting documents used to record adjustments in financial transactions.

Debit note is issued by a buyer to a seller to request a credit for overcharged or returned goods/services.
Credit note is issued by a seller to a buyer to provide a credit for undercharged or faulty goods/services.
Debit note increases the buyer's accounts payable and decreases the seller's accounts receivable.
Credit note decreases the buyer's accounts payable and increases the seller's accounts receivable.
Both notes serve as evidence for adjustments in financial transactions and help maintain accurate records.

Accepted Answer

Debit Note- A debit note is issued where there is a purchase return of goods. It is issued by buyer.

For ex- defected goods, short fall of goods.

Pass the accounting entry-

Vendor Account Dr

To Purchase return Account

Credit Note- A credit note is issued where there is sales return of goods. It is issued by seller.

For ex- wrong delivering of goods.

Pass the accounting entry-

Sales return Account Dr

To customer Account

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