When dealing with suppliers, it's common to encounter situations that require you to adjust your purchases, either due to pricing errors or actual product returns. In UBS (an accounting system), these adjustments are recorded differently depending on the nature of the issue. Here's a quick guide to help you understand the two common types:
1. Purchase Adjustment – Credit Note (Price Reduction, No Goods Returned)
This happens when you receive a price correction or discount from your supplier after the purchase is recorded, but the goods remain with you.
Why does it happen?
The quantity is correct, but the unit price was wrong, or a discount was missed.Example:
You bought 10 boxes at RM100 each. Later, the supplier informs you, “It should’ve been RM90 per box.”
You issue a credit note for the price difference (RM10 x 10 boxes = RM100), but you keep all 10 boxes.Effect in UBS:
Adjusts the amount in your Purchase account.
No change to your inventory.
2. Purchase Adjustment – Debit Note (Purchase Return)
This applies when you are returning goods to your supplier.
Why does it happen?
Items are damaged, incorrect, expired, or you simply received more than ordered.Example:
You ordered 10 printers, but 2 arrived damaged. You return the 2 printers and issue a debit note to reflect the return.Effect in UBS:
Reduce the Purchase account.
Decreases your Inventory (since the items are being physically returned).
Type of Adjustment | Goods Returned? | Affects Purchase Account? | Affects Inventory? |
Credit Note (Price adjustment) | ❌ No | ✅ Yes | ❌ No |
Debit Note (Purchase return) | ✅ Yes | ✅ Yes | ✅ Yes |