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Debit and Credit Note in Accounts

Following my article on learning on basic of accounting, today we will learn what is debit note and what is a credit note

and how the same are dealt with in accounts ?

image creditImage Credit

DEBIT NOTE

In accounts there were many instances when an Organization receive debit note or it has to issue a debit note to its suppliers, customers, employees, third party and so on.

when you receives a debit note, from a third party, you have to credit the account of the issuer of the note and debit the related expenses /item account.

suppose you have purchased  an item at  a rate of Rs.100 however by mistake your supplier had billed you at  a rate of Rs.95, then your supplier may issue a debit note for balance of Rs. 5 plus vat and other applicable duty. In such a case, you have to debit respective purchase and duty amount as narrated in the debit note and credit the supplier account.

Similarly if you have issued a debit note to your customer, you have to debit your customer’s account and credit the related account.

I am highlighting some major circumstances under which you may issue  or receive a Debit Note

1) Rate difference in sales/purchase invoice

2) Difference between billed and actual quantity of the invoice

3) Interest on late payment to and from suppliers/customers

4)Recovery interest or any amount from employees due to loss or damage to company’s     assets or any other cause.

5)Wrong credit or debit entry in the books of account of either party.

6) Quality difference

6) Any other circumstances which requires to issue a debit note

CREDITIT NOTE

In the same way, as explained above, circumstances may arise when an organisation may require to issue a credit note or receive a credit note.

In case of issue of Credit note to a third party, you have to credit supplier’s account and debit the related expenses head account.

Let’s assume, you have agreed to pay a purchase invoice within 1 month time to your suppliers however, you couldn’t manage to pay and your supplier agreed for a delayed payment at an interest rate of @2. p.m. for the same

Now, you have to issue a credit note to your supplier debiting interest account and crediting his account with the amount of interest.

One thing is very important to note, that you can not issue a debit or credit note to any government department, bank etc. It is applicable only for private organisation.

An employee can not issue a debit or credit note but you can do so.

In tally, Debit and credit notes are managed through Journal voucher entry.

I will post the same by writing an another article.

Mahendra Rana

Mahendra is founder and CEO of the I Vision Infotech, Authorised Tally Sales and Service Partner and helping Tally users to learn Tally and accounting free through this site

Click Here to Leave a Comment Below
shakuntala aswaney - 7 years ago Reply

thanks to your step by step TDS in Tally ERP now I can print the challan for
pymt of TDS in Bank. Now please guide me to do VAT Returns in Tally ERP and also remote login i.e if I m at home then how do I view tally ERP on my Laptop as I have loaded it on my laptop but in the office as we have wirefree Im connected to the server but when Im at my Resi 20 kms away how do I view my Tally ERP ?

Mahendra Rana - 7 years ago Reply

OK Soon I will write about remote access to tally. you can view your data anywhere from the world.the only condition is both the computer must be connected through internet.
For vat returns please refer my post about vat and excise in tally. if need more information please revert back.

Kavita Mosamkar - 7 years ago Reply

Thanks a lot to Add your article of Credit & Debit note. Its a most of Important Notes in Tally.. Even im also confussed wheh we have to issue CR & DR ? But really you explain very very well. Thanks a lot. ..

Mahendra Rana - 7 years ago Reply

Thanks kavita for your input. you can contact me for any problem relating to tally, accountancy or legal commercial matter.

sumeet - 6 years ago Reply

jordaar…………wat an example………..thanx a lot………..!!

sibi - 6 years ago Reply

I cant make debit note in tally erp 9 what to do ?
is asking “”” Adjust Classification “others” doesnot exist!””” What is a solution ???please help //

Monalisha - 6 years ago Reply

Thanks for your valuable information about accounts(debit and credit note)
You have explained clearly and it is very useful for me thanks once again

Mahendra Rana - 6 years ago Reply

Monalisa,
Thanks for your input
I am glad that you find it useful.

vijay - 6 years ago Reply

hello sir,
i need your help in optional voucher
in journal entry , by mistake one voucher was enter in optional voucher,then few day after i saw the partys account, there are no transaction in his account i know the bill was enter becasue it is new party and its ledger is created but entry is not saw in account.so is the any configure are in tally for saw optional voucher.pls send feedback.

few days ago my question for service tax is solved by you successfully.
Thanks,

Mahendra Rana - 6 years ago Reply

Vijay,
Optional vouchers can be seen by Display Exception reports
Else you can also view it from Display statement of accounts, statsticks
Next time, when you ask here, please do not forget to mention your Tally serial number else the query will not be attended

vijay - 6 years ago Reply

Thanks a lot for help & next time i remember to mention tally serial number.

gopalkrishnan - 5 years ago Reply

Sir,

How to print Debit Note Voucher in bill format.

suresh kumar - 5 years ago Reply

Sir,
Thanks for you to do our help in tally . Please always doing our help because We are a student of tally and gouide us when we are in wrong point in tally.

HIMANSHU SHARMA - 5 years ago Reply

HELLO SIR…
THIS IS HIMANSHU SHRAMA. I AM STUDENT AND WANT TO LEARN TALLY.. I KNOW THE BASICS OF TALLY, BUT FOR MY DETAILED KNOWLEDGE, I NEED SOME NOTES OF TALLY…
PLEASE TELL ME SIR HOW CAN I GET TALLY NOTES.

Manisha - 5 years ago Reply

Sir,
Can u please help me with the credit note.
In tally i have recored the credit note ( at the sale price). But the closing rate of the item is showing differnce in the rate after the credit note. The rate is going high. we are currently maintaining average cost method in tally.

magi - 5 years ago Reply

Hi….
I’m Magi Student of CA Academy
R u need credit note Information just see…

A credit note is a monetary instrument issued by a seller that allows a buyer to purchase any item or service from that seller on a future date.

Credit notes may be issued by a seller as a goodwill gesture to a buyer who wishes to return previously purchased merchandize (instead of cash repayment) in circumstances where the original sales agreement did not include an explicit refund policy for returned items. In such circumstances, a credit note of value equal to the price of the returned item is usually issued allowing the buyer to exchange his purchase for other items available with the seller.

Mahendra Rana - 5 years ago Reply

Hello Magi,
Thank you very much for helping fellow readers.
We highly appreciate it

Anitha - 5 years ago Reply

Hello sir,

I need of some Information on Tally

dilip - 5 years ago Reply

hello sir
i want Information about cash sales. which voucher is used

manoj - 5 years ago Reply

sir, where to find a complete knowledge of tally 9. so that no queries left.

azhar - 5 years ago Reply

thanks dear to solve my problem

Mirza Irfan Baing - 5 years ago Reply

I want to know How to take out Trial Balance With Head of Accoutn With Lines

Like This
_____________________
1)Cash A/c
_____________________
2)Bank A/c
_____________________
3)Expenses A/c
_____________________

Plz Inform Me…

Syd Masroor Rizvi - 5 years ago Reply

HELLO SIR…
This is Syd Masroor Rizvi. I am student and want to learn Tally, I need some notes of Tally .
Pls reply as soon as Possible.

Thanks

sekhar deb roy - 5 years ago Reply

respected sir,
I am sekhar from W.B. right naw i am working in pvt. ltd. company for jr. A/c , i want to need some important notes of tally pls repl as soon as possible.

priyanka - 5 years ago Reply

Dear sir,
I am working in construction company as Accountant.
I am using Tally9.
i have one doubt we will plan to anothr branch in MEP division what is the process of entries in head office & branch account entries uner ledger creations also plz give me sir reply.

Mahendra Rana - 5 years ago Reply

Priyanaka,

All Accounting entries depends on the nature of transactions. Now a software can’t do a magic that can offer you ready made entries.
You have to study the relationship of branches and HO. Otherwise, I am pretty sure in B. Com Accounting books there are plenty of examples of Branches/HO u have to use the same principles here in real life

vikash varnwal - 5 years ago Reply

thanks for this.
but i want to learn tally on our mobile . i want to learn tally and the entry on the tally software so plaese help to me .

Naveen - 5 years ago Reply

We received credit note from our customer for purchase of goods from Austria, kindly intemate me how to pass entry in tally erp 9.

Thanks

Naveen

rajesh - 5 years ago Reply

I cant make debit note in tally erp 9 what to do ?
is asking Adjust Classification “others” doesnot exist! What is a solution ???please help

Rajesh M. Jawade - 5 years ago Reply

I cant make debit note or credit note entry in tally erp 9 what to do ?
is asking Adjust Classification “others” doesnot exist! What is a solution ???please help

Rajesh M. Jawade - 5 years ago Reply

Tally erp 9.1.52 – Sr.No.77xxxxxxx
Sorry for sending problem without sr.no.
I can’t make debit note or credit note entry in tally erp 9 what to do ?
Tally 9 is asking Adjust Classification “others” does not exist! What is a solution ?
please help us & send reply.

Mahendra Rana - 5 years ago Reply

Rajesh,
have you enabled Debit and Credit note option in your Tally.erp 9 ?
if not then first of all go to F11, Inventory option and under invoicing set yes to debit and credit note
then save the form

regarding classification “others” can you explain me where are you facing the problem ?
if you can send a screen shot of your problem with more specific details I will be able to help you with a precious solution

meera - 5 years ago Reply

dear,

what is type of company

Rajesh M. Jawade - 5 years ago Reply

Dear Sir,
Thanks for your quick reply.
1.We have already taken yes option in F11 for D/Note & Credit Note.
2.At the time of entry complete then the message shown by software as per given details.
Adjustment classification does not exit.
How to send a screen shot copy to you?
please send your e-mail address or other option.
please guide us.

Mahendra Rana - 5 years ago Reply

Hello Rajesh,
I had sent you a personal mail to your mail id. you can respond me to that mail.
Else, you can also fill out our Contact us page and can attach your screen shots there!
Its safe and confidential.

keyuri - 5 years ago Reply

HELLO SIR/MED.

I CAN’T ENTER DUE DAYS OR CREDIT DAYS DURING ENTRY IN SALE VOUCHER . I CHOOSE AGN REF BUT AUTOMATICALY ENTER NEW REF.
PLEASE SOLVE MY PROBLEM AS ERLY AS POSSSIBLE
.

sujatha - 5 years ago Reply

i have some doubt in tally for example some of the members are giving cash for interest in with group they should be for example salary means indirect expenses

Sonu - 5 years ago Reply

Output cst, input cst, vat, custom duty, cess etc all comes under wht account in tally.
Whether it comes under Duties& Taxes or Sales a/c or Purchase a/c
Plz reply

viren9 - 5 years ago Reply

I have issue the Debit note of Rs. 13500/- they have deduct the TDS how i can enter the entry in TALLY 9

Kittu - 5 years ago Reply

Dear sir,

Recently,we gave 13000/-discount to customer against invoice value.and i make a credit note and sent to customer but in tally how can i enter and which account weather journal / credit account.Pleas reply me

chelladhadiya - 5 years ago Reply

sir,
 
i made one debit note to my supplier, then they raised credit note for that, how can i pass that entry in tally.

Ravishankar kumar - 4 years ago Reply

iam working as an account. ihave one small doubt in tally 9

Ravishankar kumar - 4 years ago Reply

howwe can calculate project cost in tally 9

HAMID MOHAMMAD - 4 years ago Reply

please send solution of this problem to me

Manjunath - 4 years ago Reply

Hello Sir,
If I purchase the cement on Credit base, directly from cement co. Pls tell what entry’s come? pls tell step by step. And pls send if u have any samples related to retail cement business. thakyou

HITESH PATEL - 4 years ago Reply

Dear Sir,
In Tally erp-9 series A release 2.0 eddition gold ultimation
Problem :- I can’t enter Details of Transport, L.R. No. & destination In Creation of sales return C.N. but in the sales return C.N. print priveiw is shown all of details that’s i was said above.(Details of Transport, L.R. No. & destination)
Plese give me solution…urgenly. ( Thank you for your upcoming answer)

sunil.A - 4 years ago Reply

Thank u Sir – I got Information About Dr & Cr

Onitolo K.A - 4 years ago Reply

sir, i need a detailed note on tally. pls, reply as early as possible.

asmita - 4 years ago Reply

hi sir i want a all journal entry and the entrys of tally 9

POONAM DINKAR SHINDE - 4 years ago Reply

FOR THIS CEMENT PURCHASE A/C IS TO BE CREATED UNDER PURCHASE GROUP AND COMPANYS A/C(NAME OF THE COMPANY ) TO BE CREATED UNDER SUNDRY CREDITORS GROUP
PASS THE FOLLOWING ENTRY IN PURCHASE VOUCHER
CEMENT PURCHASE A/C DR
TO CEMENT CO ( NAME OF THE COM )

khalifat ur rahman - 4 years ago Reply

how to print debit note voucher in bill format
pls advise

gagan deep - 4 years ago Reply

DEAR SIR

I WANT TO KNOW ABOUT CREDIT NOTE AND DEBIT NOTE ENTRIES IN TALLY.

Amit Sharma - 4 years ago Reply

Hello sir,

Myself amit, i want to know how can i create retail invoice in tally

Omprakash Ankam - 4 years ago Reply

Why we update tax number on invoice ? why menditory to update it ? can you please guide me on compliance ?

is it fine, if I sent invoice without tax number to buyer and sent it later via email or call?

Omprakash.

rahul - 4 years ago Reply

Sir i also want to know when we issue Dr or cr note to our vendors

V. RAJA - 4 years ago Reply

Thanks sir, i got a clarification by your explaination. your explaination will be useful for me in my organaisation.

Somnath Dhole - 4 years ago Reply

Dear Sir i was joined a manufacturing company from service sector handling total Accounts Receivable Process so, which kind of care i have to be taken and where to pay a attention Please replay me we are using Tally 9 and shifting in new integrated business solution soft as per our requirement.

Thanks

Naresh Singh Bisht - 3 years ago Reply

Dear Sir,
m Naresh,
i want to know how can i pay on line TDS, SERVICES TAX AND VAT, on ERP9

Nagappan - 3 years ago Reply

Sir , i am using Tally.ERP.9 Release 1.1
while entring credit notes or debit notes , it says ” Adjustments, classification,others does not exit ”
in F11 i have already given yes for debit notes and credit notes.
Thank you sir

Nagappan - 3 years ago Reply

Sir , i am using Tally.ERP.9 Release 1.1
while entring credit notes or debit notes , it says ” Adjustments, classification,others does not exit ”
in F11 i have already given yes for debit notes and credit notes.
Thank you sir

Nagappan - 3 years ago Reply

dear sir, i am using tally erp9 and when going to credit note in invoice format it works up to accept y / n. when we press yes it says adjustment classification “others” does not exist.

in sales invoice before narration it asks for “show statutory details”
I do not want them. please do help me

Naveen - 3 years ago Reply

Hi,

How to pass the entry in tally for the same amount debit to party A/c and after two days same amount credited to same A/C..Please help me

Naveen

Tinku sharma - 3 years ago Reply

Sir please tell me what is the diff between tally 9.1 and previous versions

priya - 3 years ago Reply

wonderful sir, it is too good n i apply it in my work thanks so much,
but one more help i need sir ..when ever i use tally or any accounting software i feel so much confuse what i hve to fill like divion …….. unitcode….. sub ledger ……… yes /no cost centre so what should i do?

VIJAY - 3 years ago Reply

Sir , i am using Tally.ERP.9 Release 1.1
while entring credit notes or debit notes , it says ” Adjustments, classification,others does not exit ”
in F11 i have already given yes for debit notes and credit notes.
Thank you sir

manoj - last year Reply

sir, our purchase materials and sales materials are different. so we entry in TO/ BY format.
how to entry the bill if multiple vat amount together. can you help me sir

nabin - last year Reply

Sir Please help me
i get the problem after creating credit note. when i create credit note the quantity is adjusted but amount is not. In receiving payment voucher amount still shows in due (as dr) even after payment. F5/F4 shows 0 balance but when the against referances comes inside it there is due balance. why?

outstanding report is not matching with Ledger account of customer.

Mahendra Rana - last year Reply

You need to adjust the against reference for the credit note. Use Original sales invoices. Also it is difficult to guide without having proper details like tally version and release you are using.

tarun vats - last year Reply

sir when i entered credit note in tally it shows adjustment classification others does not exist kindly resolve it

Shailendra Rajput - 10 months ago Reply

when I going to make Credit note entry in Tally ERP tally shows error as Adjust Classification “others” does not exist.
Please advise me to how can I remove this error.

Naveen kumar - 9 months ago Reply

Naveen

Sir when i entered credit note in tally it shows adjustment classification other does not exist kindly advice me to how can i remove this error sir.

praveen singhal - a few months ago Reply

my problem is same as a rajesh m. jawade……..
pls give the solution

Sam Raika - a couple of months ago Reply

Dear Sir,

As i am about to finish entering debit note in Tally erp 9, it says adjustment classification ‘error’ and cannot proceed further. Before it was working fine and due to this reason all my work got pending. Please help. Thanks

Harish Anand - 3 weeks ago Reply

Dear Tally Team,
I want to make credit note against same as debit note it it possible so please guide us. So i want to integrate debit note with credit note so please help me.

Thanks
Harish

Mahendra Rana - 3 weeks ago Reply

Can you explain your exact requirement?
By Default both the Credit and Debit notes available in Tally.ERP 9

AKILAH - a couple of weeks ago Reply

DEAR SIR PLS EXPLAIN HOW TO POST EBTRIES IN DEBIT AND CREDIT NOTE/… WHICH TO DEBIT AND WHIH TO CREDIT

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