what is debit note in accounting? write the advantage and disadvantage of debit note.
Answers
A debit note is a document used by a vendor to inform the buyer of current debt obligations, or a document created by a buyer when returning goods received on credit. The debit note can provide information regarding an upcoming invoice or serve as a reminder for funds currently due.
ADVANTAGES OF A DEBIT CARD:
Easily obtainable. Once you have a checking accounting with a bank, a debit card will be issued to you.
Convenient. As compared to taking the time to write out a check, you can just enter your card’s chip or swipe your card.
Safety. As mentioned above, carrying a debit card is safe than carrying around a bunch of cash.
Accepted everywhere. When you’re out-of-town, your card is accepted all over the world.
Keeps you in budget. Since you can not spend more than you have in your account, this helps you avoid fees associated with debt and credit cards (late payments, etc.). This makes this type of financial tool kid-friendly to use.
Pin number protected. Your pin is required for making any kind of purchase. Therefore, if your card is lost or stolen, no unauthorized activity can occur.
DISADVANTAGES OF A DEBIT CARD
No grace period. Because funds immediately leave your account when you buy things, you can’t borrow funds on credit. A credit card does. It leaves cash at your disposal until the end of your next billing period.
Checkbook balancing. With online banking a common thing these days, this is less of a disadvantage. Make sure to check your account to see how much money you have left.
Less protection than a credit card. You may be liable for up to a certain amount of fraudulent debit card transactions. Check with your bank to learn the details.
Fees. Using your debit card at an ATM not affiliated with your bank will cost you in fees. As opposed to a travel credit card, you may also be charged fees for foreign transactions abroad.
Doesn’t improve your credit score. By building your credit score, you’ll have access to lower interest rates when borrowing and increased credit limits. Your credit score is an important number that’ll impact your life.
No reward points. By earning and taking advantage of credit card points, you can use credit card rewards to travel and spend on other purchases. Debit cards do not offer this type of incentives. Though, debit cards DO offer their own set of incentives, such as travel insurance, etc.
Merchant blocks. A hold may be put on your money to ensure you have enough money for a particular transaction. A common place where a hold is put on your money is at gas stations. The hold is generally released in a day or two after your transaction clears