Explain credit note and debit note?

credit note: issue form seller to the buyer when return material or adjusted account AR AP

debit note:  issue form seller to the buyer when charged anything not included in the invoice ( commission bank, penalty fees, adjusted account AR AP )

Credit note is Cash in

Debit note is cash out

• Debit note also known as debit memorandum is a commercial document issued by a buyer to a seller as a means of formally requesting a credit note. Debit note acts as the Source document to the Purchase returns journal.

• A credit note or credit memorandum is a commercial document issued by a seller to a buyer. Credit notes act as a Source document for the Sales return journal.

1. When a buyer returns goods to the seller, he sends a debit note as an intimation to the seller of the amount and quantity being returned and requesting the return of money.

2. A debit note is sent to inform about the debit made in the account of the seller along with the reasons mentioned in it.