Credit Note is an accounting document that is generated to record any credit given to a Customer (or a Trade Debtor in other words). The credit is given to a customer for various reasons for e.g. damaged/faulty goods, over-pricing of items sold to him, selling at a price not agreed with him etc.
May 18 2014 07:42 PM
Since Trade Debtors normally have a debit balance because we sell goods to them which become a receivable until they are paid so if there is any reduction to this debit balance it will be through a credit isn't it. That's why when a Debtors' receivable balance is reduced for some reason (like the reasons that I mentioned above) we acknowledge that reduction through a Credit Note meaning we are confirming our Trade Debtor that will receivable or debit balance has been credited (or reduced) with the amount as per Credit Note.