Hello friend...i hope you are doing well. Today i am going to teach you about the uses of a credit note in accounting. Credit notes are a type of source documents in accounting. I hope it will shed more light on the same. This document is used to reduce overcharge. An overcharge is where the invoice had been overstated either by the creditor or the seller. There are different types of credit notes. These include;
I. Outgoing credit note; this is used to reduce credit sale made to the creditors. It is issued when goods sold on credit to the debtors are returned by them. This implies that the amount owed by the debtors to the organization is reduced. Outgoing credit notes are recorded on sales returned inward book.
II. Incoming credit note; This is issued by the creditors to the business. When you purchase goods on credit from the suppliers then some of the goods are returned by you to the supplier, then the amount that you are supposed to pay the supplier is reduced. This is done by the supplier on issue of a credit note. Lastly, all the incoming credit note is recorded on the purchases return day book.
I hope that information was of use to you...Have a nice day!
You have a good point here!I totally agree with what you have said!!Thanks for sharing your views...hope more people will read this article!!! Milton barbarosh
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