Business

Difference between Debit Note and Credit Note

Main difference

Nowadays, the return of the merchandise is a fairly common thing other than the sale and purchase of the merchandise. The debit note and the credit note are the document or note, which is used by the people of two businesses when the return of goods is made. People often found it difficult to tell the two terms apart as they are closely associated with each other. Before distinguishing between the two terms, it is necessary to know what credit and debit are about. Those who have a bank account will be quite familiar with the terms of depositing money or the amount that is made into the account known as a credit. On the other hand, the expenses and withdrawals from the account made are called debit to the account. Next, the debit note is the document that the buyer issues to the supplier when returning the merchandise. The debit note informs about the debit made in the account of the other party. Contrary to this, the credit note is a financial document that is issued by the seller to the buyer, saying that he has received the merchandise returned by the buyer.

Comparison chart

Debit note Credit note
Sent / Received The debit note is the document that the buyer issues to the supplier. The credit note is a financial document that the supplier issues to the buyer.
Use Debit note issued by the buyer to the seller when returning the merchandise. The credit note indicates that the supplier has received the merchandise returned by the buyer.
ink The debit note is usually written in blue ink. The credit note is usually written in red ink.

What is a debit note?

The debit note is the debit note or debit memorandum, which is issued by the buyer to the supplier. The debit memo indicates the details about the amount debited from the supplier’s account and the reasons behind this are also mentioned. The buyer sends this document to the seller and informs him that the buyer has debited his account. Along with this debit note, mention the detailed reason for doing so. There may be various reasons for issuing the debit note; mainly, the buyer sends this note to the supplier after he overcharges his account. The other prominent use is when the goods purchased by the buyer are returned to the seller. In some cases, the buyer sends the debit note after the supplier is undercharging the buyer’s account for uncertain reasons. Very often, the debit note, which shows the positive amount that is sent when the buyer returns the goods on credit. The debit note is prepared like the normal invoice; reports mainly on the debit made to the seller’s account. Apart from that, it also mentions the detailed reasons for the debit made. The debit note is usually written in blue ink.

What is the credit note?

The credit note is the credit note or the credit memorandum, which the seller issues to the buyer. The credit note provides detailed information about the amount credited from the buyer’s account and also mentions the detailed reason for it. In other words, we can say that it is the seller’s response to the buyer after he receives the credit note from the buyer’s side. The credit note is for the purpose of informing the buyer. The credit note is usually written in red ink. The credit note shows the negative amount since it reduces the accounts payable. The credit note can be issued for several reasons, the most important of which are: when the buyer overcharges the seller’s account, the seller receives the merchandise that was sold to him or the seller charges the buyer less.

Debit note versus credit note

  • The debit note is the document that the buyer issues to the supplier. On the other hand, the credit note is a financial document issued by the supplier to the buyer.
  • Debit note issued by the buyer to the seller while returning the goods, while the credit note indicates that the seller has received the goods returned by the buyer.
  • The debit note is a response to the credit note.
  • The debit note is usually written in blue ink, while the credit note is usually written in red ink.

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