What is the difference between a credit note and a debit note, and how do they affect inventory balances in voucher entries?

A credit note and a debit note are both accounting documents used to record adjustments to financial transactions. The main difference lies in their purpose and the effect they have on inventory balances in voucher entries 
Credit Note:
Step1: Purpose: A credit note is issued by a seller to a buyer to acknowledge a reduction in the amount owed by the buyer. It is usually issued for various reasons, such as returns, discounts, or overpayments.
Step2: Effect on Inventory Balances: When a credit note is issued for a returned or defective item, it reduces the quantity of inventory on hand. This decrease in inventory is recorded as a credit entry in the inventory account, reducing its value.
Debit Note:
Step 1 : Purpose: A debit note is issued by a buyer to a seller to acknowledge an increase in the amount owed to the seller. It is typically issued for reasons such as undercharges, additional goods received, or corrections in pricing.
Step:2: Effect on Inventory Balances: When a debit note is issued for an undercharged item or additional goods received, it increases the quantity of inventory on hand. This increase in inventory is recorded as a debit entry in the inventory account, increasing its value
  • Home
  • /
  • faqs
  • /
  • what difference between credit debit note affect inventory balances voucher entries

BUSY is a simple, yet powerful GST / VAT compliant Business Accounting Software that has everything you need to grow your business.

phone Sales & Support:

+91 82 82 82 82 82
+91 11 - 4096 4096