Introduction
In business transactions, a debit note and a credit note are the two significant tools for maintaining accurate financial records. For efficient financial records of sale return and purchase return transactions, businesses use the debit note and a credit note as the official documents.
The main difference between a debit note and a credit note lies in the origin of the two. A debit note comes from the buyer while the credit note originates from the seller. You can use accounting software like Eazybills to issue a debit note or a credit note along with other billing options.
What is a Debit Note?
A debit note is an accounting document issued by the buyer to the seller. It is the official document used to correct and adjust the financial invoice for the sale of goods and services. But it is commonly used by the seller when he needs to increase the amount of the products and charge tax on them. Eazybills help you issue debit notes in GST.
The seller used a debit note to inform the buyer about the current debt obligation in the buyer's accounts. For the seller, it increases the number of receivables in the books of the seller. Debit notes are the commonly used accounting tool that facilitates the accuracy of the books and makes business transactions more efficient.
What is a Credit Note?
A credit note is a financial accounting document in business transactions issued by the seller to the buyer. It indicates that the buyer owes less than the amount stated on the original invoice. The vendor used a credit note to assure the buyer that he (the buyer) is entitled to the credit because of the return of the goods, cancellation of an order, invoicing errors, product quality issues or price changes.
A credit note also ensures that the purchase return is accepted by the seller. It is commonly known as a refund statement to the buyer's account as a credit note concedes and records a specific amount is credited to the account of the buyer. Use Eazybills to issue credit notes.
Difference between a Debit Note and a Credit Note
Debit note vs credit note becomes the principal key to understanding where the business regularly deals with both terms. Below is the list of key differences between a debit note and a credit note.
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Meaning
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A debit note is a document issued by the buyer to the seller to return the goods received due to quality defects or other issues. A debit note in GST is similar.
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A credit note is a financial document issued by the seller to assure that the purchase return is accepted by the buyer.
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Issuer
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A debit note is issued by the buyer.
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A credit note is issued by the seller.
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Purpose
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The purpose of a debit note is to acknowledge an increase in the amount received from the buyer.
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A credit note is to acknowledge the decrease in the amount received from the buyer
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Accounting
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Under the accounting term, a debit note is written in the purchase return books.
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Under the accounting term, the credit note is written in the sales return books.
The difference between a debit note and a credit note is now understood. A debit note vs credit note is issued by a buyer and a seller respectively. Eazybills is an outstanding billing software that can help you with all your accounting needs.