Credit Memo

[shoaibmalik53]

What's difference between AR debit memo and AP debit memo? How we financially treat these memos?

[admin]

AR: In AR Receivable is always Debit now if there is a need to increase Receivable you will create Debit memo and to reduce Credit memo.

You invoiced 100$ but later you realized it should have been 120$ now to increase Receivable you will create a Debit note of 20$ and vv

AP: In AP Liability is always Credit now if there is a need to increase Liability you will create Credit memo and to reduce Debit memo.

You received invoice from supplier of 100$ but later supplier informed the mistake and you have to increase liability then you need to create a Credit note.

Hope now clear if still any point let us know.

[vicky.adwani]

In case of AP, both debit memo and credit memo will reduce the balance of supplier unlike AR......for eg: Say an organisation rejects certain material of an invoice amount, then it will raise an debit memo to reduce the supplier liability...In contrast to this say you got an discount from the supplier then you will issue a credit memo which will again reduce the balance liability of supplier...[8D]