Debit Note

Posted in Finance, Accounting and Economics Terms, Total Reads: 265
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Definition: Debit Note

Debit Note is a commercial document issued by a buyer to a seller for certain business to business transactions or vice versa.


Debit Note is issued in the following cases.

a. When seller has not issued invoice to the buyer, seller sends Debit Note to buyer to make a debit to buyer’s account.

b. When seller has issued invoice but undercharged the amount. In this case also seller sends a debit note to the buyer to make a debit of extra amount to buyer’s account.

c. In case of receipt of damaged goods by buyer, buyer returns damaged goods with a debit note to debit seller’s account.


Example:

Suppose B&T Company buys 10 numbers of Diesel Generators from Pummins worth ₹100000 per diesel generator and receives one damaged diesel generator. In this case B&T will issue a debit note to Pummins and will make a debit of ₹100000 to Pummins’ account. B&T will also return damaged DG to Pummins.

 

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