Dear All,
I need help in understanding accounting entry for a credit memo. There is a scenario in which due to some defects the product is returned and therefore a credit memo is created.
In the system the accounting entry is a s below:
Debit revenue with 5000 ➕
Credit Customer with 5000 ➖
Please explain why there is an increase in revenue and Customer's account is posted with negative amount? As per my understanding, a credit note to a customer means that my revenue should go down and customer should receive the amount. It may be possible that I'm mis-comprehending the entry hence please help me out.
Warm Regards
Mazdul