Question

A document sent by our company to supplier which indicates that balance in supplier's account is being reduced by amount of purchase returns or purchase allowances is called as _______________________.​

Answer 1

Answer:

credit

Step-by-step explanation:

Answer 2

Answer:

Debit Note

Explanation:

Debit Note-

• A debit note, which exists independently of an invoice, alerts a customer to current debt responsibilities.
• When returning products obtained on credit, a buyer also creates a debit note.
• When products are returned, the notice will include the credit amount, an inventory of the items, and the reason they were sent back.

• Debit Note represents Positive Amount
• Purchase Return Book is modified.

• It demonstrates minimization in accounts receivable.
• It is traded in for a credit note.
• Debit notes differ from invoices in that they frequently take the form of letters and may not call for immediate payment.

Working of a Debit Note.

• In business-to-business transactions, debit notes—also referred to as debit memos—are frequently used.
• An extension of credit is frequently used in these transactions, which means that a seller would ship items to a business before the buyer has paid for them.
• The buyer is informed in the note that the seller has taken money out of their account.
• Real money is not transmitted until a legitimate invoice is generated, despite the fact that real products are being exchanged.
• In order to manage shipped inventories and outstanding payments, debits and credits are instead recorded in an accounting system.

Hence, from the above discussion we can say that a Debit Note is  document sent by our company to supplier which indicates that balance in supplier's account is being reduced by amount of purchase returns or purchase allowances .

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