A Debit note is prepared when goods are returned by the
purchaser due to some reason. Two copies of this note are prepared. The
original copy is sent to the party (i.e. Seller of goods) to whom goods are
returned and the duplicate copy is kept in the office record. It is called a
debit note because the party’s account is debited with the amount written in
this note for the goods returned. The same debit note becomes credit note from
the receiving party’s point to view because he credits the account of the party
from whom he received the note along with the goods.
A credit note, as stated above, is like a
debit note. It is sent by the seller to the purchaser for the goods returned by
the latter to the former. It is called a credit note because the party’s
account is credited with the amount written in this note for the goods returned
by the party. The same credit note becomes debit note for the party sending
this for the goods received.
The object of sending a credit note to a
customer is to inform him that he has been credited in our books. A credit note
is also sent to the customer in the following cases:
1.) When he is allowed some discount or allowance in defective,
damaged or unsatisfactory goods.
2.)
When an excessive charge was made by mistake.
3.)
When cartons or containers are returned by the customer.