Rushabh Shah (Business) (574 Points)
18 December 2011Hey guys,
I had this confusion about the exact implication of debit and credit notes,so wanted to more about the same.
Why are they issued?
Also is it necessary that debit notes are raised only to reduce the balance of creditors or also to increase the balance of debtors and same for credit notes?
Thanks a lot !!!
Mahesh Paryani
(Chartered Accountant)
(365 Points)
Replied 18 December 2011
Hi Rishab
there are various angles you can look at your query.
1 of it is audit.
Considering it as a query for audit .
Sales is considered as fraud risk. and if any adjustment is to be made for sale is through debit note and credit note (Depending on the nature of software usually onse the entry is passed in software it cannot be reversed therefore to reduce or to increase the sales these type of vouchers are passed) in audit you have to understand the logic of passing the vouchers and the relevant authorisation for the same.
Mahesh Paryani
(Chartered Accountant)
(365 Points)
Replied 18 December 2011
Hi Rishab
there are various angles you can look at your query.
1 of it is audit.
Considering it as a query for audit .
Sales is considered as fraud risk. and if any adjustment is to be made for sale is through debit note and credit note (Depending on the nature of software usually onse the entry is passed in software it cannot be reversed therefore to reduce or to increase the sales these type of vouchers are passed) in audit you have to understand the logic of passing the vouchers and the relevant authorisation for the same.
Rushabh Shah
(Business)
(574 Points)
Replied 18 December 2011
Thanx for the reply Mahesh ..Can u please throw a little more light on the same regarding the concepts of both of them.
Giridhar S Karandikar
(Team Lead)
(7548 Points)
Replied 19 December 2011
Debit Note & Credit Notes are used when there are transaction regards to Debtors & Creditors.
For instance A Supplier has issued an Invoice to his Debtor. Now he realizes that the rate charged in the Invoice shud have been 150 instead of 140. So in this case the supplier has undercharged the customer by Rs.10. So in this case the Supplier will issue a Debit Note to his customer, stating the facts of the case & will debit the customers account with the difference.
In turn the debtor will record the difference in his books & he will send an Credit Note to the creditor stating that his account is being credited by the difference.
In this way there are numerous other transactions for which Debit/Credit notes are being issued by the either party.
sanjay kumar sharma
(accountant)
(21 Points)
Replied 24 April 2014
sir,
ANY INDIAN COMPANY DEALING WITH ANY FOREIGN COMPANY IN THE MODE OF SALES & PURCHASE THROUGH MEAS (INDIAN COMPANY BUYING THE CLOTH FROM FOREIGN COMPANY AND INDIAN COMPANY SALLING THE RAICE TO FOREIGN COMPANY.
BUT FOREIGN COMPANY TOLLED TO INDIAN COMPANY SALLING & PURCHASE DIFFERENCE AMOUNT PAY TO INDIAN COMPANY IS IT POSSIABLE.
6 days Certification Course on GST Practical Return Filing Process
CAclubindia
