credit note
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A
credit px, Domestic credit to private sector in 2005 Credit (from Latin Latin (, or , ) is a classical language belonging to the Italic languages, Italic branch of the Indo-European languages. Latin was originally spoken in the area around Rome, k ...
note or credit memo is a commercial document issued by a
seller Sales are activities related to selling or the number of goods sold in a given targeted time period. The delivery of a service for a cost is also considered a sale. The seller, or the provider of the goods or services, completes a sale in ...

seller
to a
buyer Procurement is the process of finding and agreeing to terms, and acquiring goods In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distri ...
. Credit notes act as a
source document A source document is a document in which data collected for a clinical trial is first recorded. This data is usually later entered in the case report formA case report form (or CRF) is a paper or electronic questionnaire specifically used in clinic ...
for the sales return journal. In other words the credit note is evidence of the reduction in sales. A credit memo, a contraction of the term "credit memorandum", is evidence of a reduction in the amount that a
buyer Procurement is the process of finding and agreeing to terms, and acquiring goods In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distri ...
owes a
seller Sales are activities related to selling or the number of goods sold in a given targeted time period. The delivery of a service for a cost is also considered a sale. The seller, or the provider of the goods or services, completes a sale in ...

seller
under the terms of an earlier invoice. It can also be a document from a
bank A bank is a financial institution Financial institutions, otherwise known as banking institutions, are corporation A corporation is an organization—usually a group of people or a company—authorized by the State (polity), stat ...

bank
to a
depositor A deposit account is a bank account A bank account is a financial account maintained by a bank or other financial institution in which the financial transaction A financial transaction is an Contract, agreement, or communication, carried o ...
to indicate the depositor's balance is being in event other than a deposit, such as the collection by the bank of the depositor's note receivable.


Features

A credit note lists the products, quantities and agreed prices for products or services the seller provided the buyer, but the buyer returned or did not receive. It may be issued in the case of damaged goods, errors or allowances. In respect of the previously issued invoice, a Credit Memo will reduce or eliminate the amount the buyer has to pay. ''Note:'' A Credit Memo is not to be substituted as a formal document. The Credit Memo rarely contains: PO #, Date, Billing Address, Shipping Address, Terms of Payment, List of products with quantities and prices. Usually it references the original Invoice and sometimes states the reason for issue.


Uses

* To allow the buyer to purchase an item or service from that seller on a future date, i.e. a
gift card A gift card also known as gift certificate in North America, or gift voucher or gift token in the UK is a prepaid stored-value money card, usually issued by a retailer or bank A bank is a financial institution that accepts Deposit acco ...

gift card
or store card credit. Credit notes may be issued by a seller as a goodwill gesture to a buyer who wishes to return previously purchased merchandise (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 sale.


See also

*
Accounting Accounting or Accountancy is the measurement ' Measurement is the number, numerical quantification (science), quantification of the variable and attribute (research), attributes of an object or event, which can be used to compare with other ob ...
*
Credit (accounting) Debits and credits in double entry bookkeeping are entries made in account ledger A ledger is a book or collection of accounts in which account transactions are recorded. Each account has an opening or carry-forward balance Balance may refer ...
* Debit note


References

{{Authority control Credit Accounting source documents