Supporting Documents: Debit note MCQs Quiz | Class 9
This is a multiple-choice quiz for Class IX, Subject: Elements of Book-Keeping & Accountancy (Code 254), from Unit 3: Nature of Accounts & Rules for Debit and Credit. This quiz covers the topic of Debit Notes, focusing on their meaning and use in cases of purchase returns or undercharging by a supplier. Attempt all questions and click ‘Submit Quiz’ to see your score. You can then download a PDF of your answers.
Understanding Debit Notes
A Debit Note is a commercial document issued by a buyer to a seller as a means of formally requesting a credit note. It acts as a source document for the Purchase Returns Journal. In essence, it is an intimation sent to a seller that their account is being debited for the reasons stated in the note.
When is a Debit Note Issued?
A buyer typically issues a Debit Note in the following situations:
- Purchase Returns: When goods purchased on credit are returned to the supplier. This could be due to the goods being damaged, of inferior quality, not matching the sample, or being in excess of the quantity ordered. The Debit Note informs the seller that their account has been debited for the value of the returned goods.
- Correction of Overcharge: If the seller has overcharged the buyer in an invoice (e.g., charged a higher price than agreed, or made a calculation error), the buyer issues a Debit Note to correct the excess amount.
A seller might issue a Debit Note if they have undercharged the buyer in an invoice, to inform the buyer that their account is being debited for the short-charged amount.
Key Features of a Debit Note
- It is prepared by the buyer (in case of purchase returns).
- It contains details like the date, name and address of the seller, reasons for the debit, and the amount.
- It is the source document for recording entries in the Purchase Returns Book.
- It serves as evidence that a debit has been made to the seller’s account in the buyer’s books.
Debit Note vs. Credit Note: A Quick Comparison
| Basis | Debit Note | Credit Note |
|---|---|---|
| Issued By | Primarily by the Buyer (for returns) | Primarily by the Seller (acknowledging returns) |
| Reason | Goods returned, overcharge in invoice. | Goods received back from customer, acknowledging overcharge. |
| Effect | Reduces the liability of the buyer. | Reduces the amount receivable from the customer. |
| Journal Entry | Supplier’s A/c is debited. | Customer’s A/c is credited. |
Quick Revision Checklist
- A Debit Note is a formal notification of a debit made to a supplier’s account.
- It is most commonly issued for purchase returns.
- It serves as the basis for recording in the Purchase Returns Journal.
- It must contain a clear reason for the debit.
- The counterpart to a Debit Note (for purchase returns) is a Credit Note issued by the seller.
Practice Questions
- Explain the circumstances under which a buyer issues a debit note to a seller.
- What is the accounting entry passed in the books of the buyer when a debit note is issued for goods returned?
- Differentiate between an invoice and a debit note.
- Why is a debit note considered a source document?
- If a seller undercharges a buyer, who issues the debit note to correct the error?
