Do you know the term Debit Note? The name feels foreign, isn’t it in your ears? For those of you who are engaged in accounting are already familiar with the term debit.
Yes, in practice it is not uncommon for business actors to issue Debit Notes and Credit Notes which are evidence of external transactions. This matter is. This is a process of accounting.
In this article, we would like to share information that many people do not know or understand about what is debit notes and credit notes. However, we will first discuss the notion of debit and credit in general, please read it first!
What is Debit?
Debits in accounting come from Latin, namely Debere. Debits are the opposite of credit, as a record in a accounting account that increases the value of an asset or reduces the amount of a liability.
The definition of Debit in general is a reduction in deposits in a bank account or bookkeeping record that increases the value of assets or reduces the amount of liabilities.
Debit and credit are terms that are often used in the world of financial accounting. Debit is defined as an increase in money in a savings or account and can also be interpreted as an increase in transactions.
While credit is defined as spending money when making transactions. However, the term credit is better known as providing money for loans and loan agreements between banks and their customers and is required to pay off within a certain period of time.
Debit and credit can not only be interpreted as adding or reducing money in savings. Because in the interests of the company’s financial statements, debit and credit are not that simple. Debit can also be interpreted as money that must be billed to other people or receivables.
What is Credit?
Credit is the accounting records when conditions occur where liability and equity have increased (increased). Or assets and costs have decreased (decreased). Credit is the opposite of debit, and is on the right hand side.
What Does Credit Debit Mean in Accounting?
In terms of meaning, the term credit debit does not actually have any meaning in accounting. A common misconception, especially for people who are just learning accounting, is that debit means “increasing” while credit “means” decreasing.
This definition is true in some components of the account in accounting, namely assets and expenses. However, in other components such as liability, owner’s equity and income definition is clearly not right.
Thus, debit and credit cannot be interpreted or interpreted only by increasing and decreasing, because the conditions are different for each group of accounts.
The conclusion based on what I read from several sources is that debits and credits have no meaning, other than the recording position of an account whether it is on the debit or credit side, based on the characteristics of each account.
What is Debit Note?
Memorandum Debit, or better known as a debit note (debit note) is proof of the transaction of sending goods back goods purchased (purchase returns) and a decrease in the price of goods. Usually occurs because the goods purchased there are damaged or not according to order.
A debit note is made for purchase return and item price reduction transactions. The buyer makes a debit memorandum which is then sent to the seller.
With the issuance of Debit Notes, it can be interpreted that there has been a reduction in the buyer’s business debt which must be paid off or paid for due to the return of merchandise or a decrease in the price of the goods. The buyer sends the original sheet to the seller at the same time sending back the goods purchased (if making a purchase return).
What is Credit Note?
Credit Memorandum or better known as a credit note (credit note) is proof of the transaction of receiving goods back goods that have been sold on credit (sales returns), or reduction / decrease in price on the invoice because there are damaged goods or quality that is not in accordance with the order. So the buyer returns the item. Credit notes are made by the seller and sent to the buyer. Credit notes reduce the seller’s trade receivables to be billed to the buyer.