A debit memo on the bank statement means a deduction from the balance on the bank account for services provided by the bank to the customer, a fee for a bounced check, or payment for issuing of check stock. This is a rather rare use of such way communication with the customer because bookkeepers usually issue a new invoice or create an invoice just for the money owed.Īn entity can issue a debit memo when it feels an error has been made. It can refer to an informal invoice from a supplier showing an additional amount due. There are other uses of this term in the financial world. Note that if you issue a memo, that is what you do (credit or debit the appropriate account), but if you receive a memo, you do the opposite (credit an account if you get a debit note). So, if the buyer wants to communicate with the seller that they are decreasing the accounts payable, they then send a debit memorandum. It is a source document and a way of communication between the seller and the customer. Thus, the definition of a debit memo is very simple. To acknowledge a receipt of the credit memorandum, the customer can issue a debit memo to the seller. When the buyer receives a credit memo, they debit (do the opposite) the accounts payable to reduce their liabilities. At the same time, the seller sends a credit memo to the buyer just to let them know that they have credited the buyer’s account. When the equipment is returned, the seller credits the buyer’s Accounts receivable to reflect in the books that the customer no longer owes anything. Now, let’s assume the customer wants to return defective equipment they purchase from the business. The seller will have an Accounts receivable account and the buyer will have an Accounts payable account. What exactly does a debit memo mean? When a buyer purchases something from a business on a credit, both make records in the accounting books. More details.When dealing with merchandise inventory, some of the new terminology you might come across is debit and credit memo. We have never verified the credentials of any user. Please seek appropriate professional advice for tax-related matters. Resume Homework Offtopic Undo Filter Useful Links General InformationĪny opinions provided within this community are for informational purposes only. Accounting Coach - For Students, Small Business, & Bookkeepers.Brigham Young's Learning Accounting Free./r/Accounting's CPA review course recommendations - 2014.Podcast - How to find the best external accounting recruiter.Please use the report button to ask the moderation team to address off-side comments. While no advice or credentials of those giving advice have been verified or endorsed, any blatant violations of ethical rules are not tolerated. This also extends to PM'ing users because of comments they made on this subreddit. We expect users to not use the subreddit for financial gain, although we will remove self-promotion regardless of whether there has been personal financial gain. Do not post your own blog, website, or video channel. This includes business solicitations and advertisements, referrals and job postings. Personal attacks are not tolerated.Ģ) Avoid most self-promotion, advertising, or solicitation. You can feel free to be "harsh", but never insulting. Live chat on Discord! Click here for an invite Rules:īe patient with others. ALL SIDEBAR LINKS IN OLD REDDIT ARE NO LONGER KEPT UP TO DATE, PLEASE VIEW NEW REDDIT FOR UPDATED LINKS /r/Accounting Chatroom: