Debit Note vs. Credit Note: What's the Difference?

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Key Difference

Nowadays the returning of the goods is quite a common thing other than selling and purchasing of the goods.  The debit note and the credit note are the document or memo, which are used by the people from two business when the return of goods is done. People often found it difficult to differentiate between both the terms as they are closely associated with each other. Before distinguishing between both these terms, one needs to know about what credit and debit are about. Those who have a bank account will be quite familiar with both the terms of the money deposit or addition made in the account is known as the credit. On the other hand, the expenditure and withdrawals from the account made are termed as the debit to the account. Following it, the debit note is the document that is issued by the purchaser to the vendor while returning the goods. The debit note tells about the debit made to the other party’s account. Contrary to this, the credit note is a financial document that is issued by the vendor to the purchaser, it tells that he has received the goods returned by the purchaser.

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Comparison Chart

Debit NoteCredit Note
Sent/ReceivedThe debit note is the document that is issued by the purchaser to the vendor.The credit note is a financial document that is issued by the vendor to the purchaser.
UsageDebit Note issued by the purchaser to the vendor while returning the goods.Credit Note tells that vendor has received the goods returned by the purchaser.
InkThe debit note is usually written in blue ink.The credit note is usually written in red ink.

What is Debit Note?

Debit Note is the debit memo or the debit memorandum, which is issued by the purchaser to the vendor. The debit note tells the details about the amount debited from the vendor’s account and the reasons behind it are also mentioned. The purchaser sends this document to the vendor and tells him that the debit has been made to his account by the purchaser. Along with this debit note, he/she mentions the detailed reason for doing so. There can be multiple reasons for issuing the debit note; most primarily the purchaser sends this note to the vendor after he overcharges his account. The other prominent usage is when the goods bought by the purchaser are returned to the seller. In some cases, the purchaser sends the debit note after the vendor is undercharging his account due to the uncertain reasons. Most often, the debit note, which shows the positive amount is sent when the purchaser return goods on credit. The debit note is prepared like the regular invoice; it mainly tells about the debit done in the account of the seller. Other than that, it also mentions the detailed reasons for the debit made. The debit note is usually written in blue ink.

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What is Credit Note?

Credit Note is the credit memo or the credit memorandum, which is issued by the vendor to the buyer The credit note gives the detailed information about the amount credited from the purchaser’s account, and also mentions the detailed reason for that. In other words, we can say that it is the answer from the vendor to the purchaser after he/she receives the credit note from purchaser’s side. The credit note is meant for the informational purpose of the buyer. The credit note is usually written in red ink. The credit note shows the negative amount as in this the account payables are reduced. The credit note can be issued for the multiple reasons, out of them, the most important are: when the buyer over charges the seller’s account, the vendor receives the goods back he sold to the purchaser or the seller undercharges the buyer.

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Debit Note vs. Credit Note

  • The debit note is the document that is issued by the purchaser to the vendor. On the other hand, the credit note is a financial document that is issued by the vendor to the purchaser.
  • Debit Note issued by the purchaser to the vendor while returning the goods, whereas credit note tells that vendor has received the goods returned by the purchaser.
  • The debit note is an answer to the credit note.
  • The debit note is usually written in blue ink while the credit note is usually written in red ink.

Explanatory Video

https://www.youtube.com/watch?v=2NTxb40FBAc