Somasekhara Reddy Chamala’s Post

PREPAYMENT INVOICE: What ever the advances we are giving to the supplier,that record we will maintain prepayment invoice. 1)Permanent Prepayment: It’s a advance payment which cannot be adjust against future Invoices.  2)Temporary Prepayment: It’s a advance payment which can be adjusted against future invoices Prepayment Payment Period Status- Before validation:Never validated After validation:Unpaid After pay in full:Unpaid After payment done:available If applied full amount:full applied Prepayment Entries:  1)At The Time Pre-Payment Creation: Prepaid exp-Dr Liability-Cr 2)At The Time payment: Liability Ac-Dr Cash Clearing Ac-Cr 3)At the time of reconiciliation: Cash Clearing Ac-Dr Cash Ac-Cr 4)at the time of standard invoice: Item exp-Dr Liability-Cr 5)PP applied against invoice: Liability ac-Dr PP expense-Cr

Credit Note vs. Debit Note: Simplified Explanation for Accounting Professionals Credit and Debit Notes are essential tools for invoice adjustments, but they serve opposite purposes. Here's the gist: 🔹 Credit Note: Issued by the seller to reduce the buyer's payable amount. Reasons: Sales returns, overcharges, or discounts. Effect: Decreases the buyer's liability. 🔹 Debit Note: Issued by the buyer to increase the payable amount. Reasons: Purchase returns, undercharges, or added costs. Effect: Increases the buyer's liability. Think of a credit note as a refund and a debit note as an extra charge. #AccountingBasics #FinancialInsights #DebitAndCreditNotes

Debit Note: A **debit note** is a document used by a buyer to inform a seller about returning goods or services received that were either defective, in excess, or didn't meet expectations. It serves as a request for a financial adjustment to the original invoice, reducing the payable amount. It can also be issued by a seller when undercharging occurs. Key details included in a debit note are: - **Document number and date**: A unique number and issue date for tracking. - **Seller and buyer details**: Company name, address, and contact information. - **Reference to the original invoice**: The original invoice number the debit note is adjusting. - **Reason for the debit**: A clear explanation (e.g., wrong quantity, defects). - **Amount**: The amount to be debited from the original invoice. It's the opposite of a **credit note**, which is used when a seller needs to refund or reduce the amount due to the buyer. #Accountspayable #Debitnote

📄 𝐂𝐫𝐞𝐝𝐢𝐭 N𝐨𝐭𝐞 𝐢n 𝐀𝐜𝐜𝐨𝐮n𝐭𝐬 𝐏𝐚𝐲𝐚𝐛𝐥𝐞. A Credit Note is a document issued by a seller to a buyer, indicating that the seller owes the buyer credit. It’s typically used to correct an invoice due to overcharges, damaged goods, returns, or other reasons that justify a refund or adjustment. Here’s how a Credit Note works in Accounts Payable: 1️⃣ Issuance: 📤 The seller issues a credit note, outlining the reason, amount credited, and relevant details like invoice number or dates. 2️⃣ Recording: 🧳 The buyer records the credit note in their accounts payable system. They debit accounts payable (to reduce the balance) and credit the appropriate expense or inventory account. 3️⃣ Adjustment: ⚖️ The credit note serves as documentation of the updated accounts payable balance, ensuring accurate financial records. #CN #Creditnotes #AccountsPayable #Finance #Accounting

Maximize cash flow 💰 and accelerate growth🚀 with Invoice Trades Invoice Discounting services. Get your invoices discounted today!  #InvoiceDiscounting #vendorfinance #BusinessGrowth2024 #invoicetrades

Invoice issuance requirements based on Section 31(1) of the Act: Goods Involving Movement: When: At or before the removal of goods. Goods Not Involving Movement: When: At or before delivery to the recipient. Continuous Supply of Goods: When: Before or at the time of issuing a periodical statement or receiving a periodical payment. Approval for Sale/Return Basis: When: Before or at the time of supply, or within 6 months from removal, whichever is earlier.

Both #BillDiscounting and #InvoiceDiscounting may seem interchangable terms but there is a subtle difference. I explain in this short video.

🔍 Understanding Payment Terms: 2/10, E.O.M. and 2/10, Net 30 🔍 💡 2/10, E.O.M.: 2/10: This part of the term indicates that the buyer can take a 2% discount on the invoice amount if the payment is made within 10 days of the invoice date. E.O.M.: This stands for "End of Month." It specifies that the due date for the full invoice amount is at the end of the month in which the invoice was issued. 💡 2/10, Net 30: Net 30: This specifies that the full invoice amount is due within 30 days of the invoice date. #BusinessTips #FinancialManagement #AccountsReceivable #CashFlow

debit note A debit note is a document issued by a buyer to a seller, typically as a request for a credit or refund for goods or services that were either overcharged or returned. It serves as a formal notification that the seller needs to adjust the amount owed by the buyer. Here are some common reasons for a debit note: Return of Goods: When the buyer returns goods to the seller, they may issue a debit note to request a reduction in the amount they owe. Overcharging: If the seller has invoiced the buyer for a higher amount than agreed, the buyer may issue a debit note to request a credit or refund for the overcharged amount. Discrepancies in the Invoice: If there are any errors in the invoice, such as incorrect quantities, prices, or terms, a debit note may be issued to adjust the billing. Defective Goods: If the buyer receives defective goods, they may issue a debit note to claim a reduction in the price or request a refund. #accauntants #debitnote #accaunting #finance #creditnote

Key Features of Debit Note : Purpose 1. Formally communicates a reduction in the amount owed to a supplier 2. Documents reasons for decreasing the original invoice amount 3. Serves as a supporting document for accounting and financial records 👉 Common Scenarios for Issuing a Debit Note: 1. Returning damaged or defective goods 2. Receiving goods in lesser quantity than invoiced 3. Discovering pricing errors in the original invoice 4. Claiming compensation for poor quality products 5. Adjusting for overcharging 👉 Contents of a Typical Debit Note: 1. Seller's name and contact information 2. Buyer's name and contact information Original invoice number 3. Date of the debit note 4. Detailed description of the reason for the debit 5. Specific amount being debited 6. Calculation of the adjusted total 7. Reference numbers and tax information 👉 Accounting Treatment: 1. Reduces accounts payable for the buyer Reduces accounts receivable for the seller Impacts the overall financial statements of both parties 👉 Legal and Financial Significance: 1. Serves as a legal document for financial adjustments 2. Provides transparency in business transactions 3. Helps maintain accurate financial records 4. Can be used for tax and auditing purposes #accauntant #accaunting #debitnote #creditnote