A debit note is a document sent by a buyer to its seller, or in other words, a purchaser to its vendor while returning goods received on credit. The intent is to notify the seller that they’ve been debited by the buyer against the goods returned.
It reduces the amount due to be paid to the seller, (if the amount due is Nil) then it allows further purchases on behalf of that.
A debit note is issued for the value of the goods returned. In some cases, sellers are seen sending debit notes which should be treated as just another invoice.
Example – Company-A buys goods worth 1,00,000 from Company-B, however, 10,000 worth of goods were found damaged due to some reason & this was notified to Company-B at the time of actual delivery.
Company-A (buyer) issues a debit note for 10,000 in the name of Company-B (seller). This reduces the obligation of the buyer by 10,000 and is now only required to pay 90,000
Just cram this: A debit note corrects an undercharge
A credit note corrects an overcharge
All the best in ur Financial Accounting 1 CAT bruh in the evening…:D:D:D
What you are referring to is a goods returned note issued by a purchase to the seller for goods not accepted by him upon delivery.
A debit not corrects an under charge and is issued by a credit seller to a purchaser.
A credit note corrects an over charge and is issued by a credit seller to a purchaser.
Sequence of purchase: Quotation/proforma invoice->Purchase order->Delivery Note->Goods received Note->Invoice->Debit/credit note->Invoice->Payment
A debit note corrects an undercharge - It is an addition to the already-issued invoice A credit note corrects an overcharge - It is an acknowledgement that the invoice already issued is overstated, the amount shown should therefore be deducted
Jamaa ako sawa wewe…Debit for undercharge (Serves as extra invoice), and Credit Note for Overcharge (Serves to reduce the amount on the invoice). That is not hard tawe
Although this is very nice article about financial asset called debit note, I am still not sure how can it widely be used in Kenya? What would be business purpose of it, and how it can be used for the benefit of ordinary people?