What happens to amount entered in credit note?

Credit note can be issued in two ways. The amount can either be put against a charge, where it behaves similar to a payment being made against a charge (although credit note reduces income where as payment reduces amount receivable).

If the amount is put as an advance payment (not against a specific charge), then the amount is treated like an advance payment and adjusted against other outstanding charges at that time or any subsequent charges raised against the unit.

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