53. What is the difference between credit and debit notes?
What is a credit note?
A credit note is issued when a credit has been made in the account of a client. The seller issues a credit note to the buyer informing them about the credit that has been provided in their account. This often occurs due to return of goods to the supplier and it has a negative impact on the accounting balance of the seller.
What is a debit note?
An invoice is made for each purchase or supply of goods or services. If for various reasons the supply falls short due to certain reasons, or extra goods are being delivered to the purchaser, then the seller will issue a debit note. This debit note with note the upward revision of prices in an already issued invoice and will inform the purchase of any future liability that they will have to pay.
Debit notes are made in cases where a tax invoice that has been previously issued, in which the taxable value of the goods from the invoices has changed after the date of issue.
What is the difference between credit note and debit note?
To put it simply, the difference between credit and debit note is that in credit notes you record money that you owe to a client due to a downward revision in an invoice and in debit notes you record money that a client owes you due to upward revision in an invoice.
A debit note is issued when there is a purchase return and reduces receivables, while a credit note is issued when there is a sales return and reduces payables.
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