What is a 'Debit Memorandum'

1. A document given to an account holder which states that the account balance has been decreased as a result of factors other than a cash withdrawal or a written check being cashed in. Debit memorandums can arise as a result of bank service charges or bounced check fees. A debit memorandum is typically sent out to bank customers along with their monthly bank statements.
Also known as a "debit memo", for short.


2. The adjustment procedure that occurs following a business's valid complaint against another business. For example, if Company A sends defective merchandise to Company B, a debit memorandum would be issued in order to adjust the accounting statements in terms of debits and credits.

BREAKING DOWN 'Debit Memorandum'

It is usually preferable to avoid debit memorandums from either the individual or business perspective. Individuals typically incur undesirable fees for additional bank service charges or for having a check bounce. On the other hand, there are numerous implicit costs for a business debit memorandum such as possible loss of reputation and human labor to make the necessary adjustments.

RELATED TERMS
  1. Offering Memorandum

    A legal document stating the objectives, risks and terms of investment ...
  2. Debit

    An accounting entry that results in either an increase in assets ...
  3. Debit Ticket

    An accounting entry recorded as a debit that acknowledges money ...
  4. Bank Debits

    A bookkeeping term for realization of the reduction of deposits ...
  5. Discussion Memorandum

    Published by the Financial Accounting Standards Board (FASB), ...
  6. Offline Debit Card

    A card that combines characteristics of both a traditional (online) ...
Related Articles
  1. Investing

    What Does Debit Mean?

    Debit is an accounting term used to refer to the left side of an accounting journal entry. Each debit must be offset by an equal credit entry.
  2. Investing

    What's a Debit Note?

    A debit note is a document used by a seller to inform a purchaser of a dollar amount owed. As the name indicates, it is a note from the seller that a debit has been made to the purchaser’s account. ...
  3. Personal Finance

    How Debit Cards Work

    Unlike credit cards, debit cards rely only on the funds available in the user’s account, so they do not let users borrow on credit. They frequently come with purchase limits, and using one at ...
  4. Trading

    Understanding Forex Rollover Credits And Debits

    Forex trades are subject to receiving interest or being debited interest if positions are held overnight.
  5. Investing

    How to Make a Closing Entry

    Observe the following procedure for making closing entries.
  6. Personal Finance

    Credit vs. Debit Cards: Which Is Better?

    Be strategic about the card you choose
  7. Personal Finance

    Debit Card Fraud: Is Your Money At Risk?

    As criminals are becoming more savvy, your money is becoming more vulnerable.
  8. Investing

    What's a Trial Balance?

    A trial balance is a worksheet listing the debit or credit balances of all the ledger accounts for an entity. Under accounting theory, the total of all the debits must equal the total of all ...
  9. Retirement

    401(k) Debit Cards: Taking A Swipe At Your Retirement Savings

    This is just another more convenient way to borrow from your plan. But at what cost?
RELATED FAQS
  1. What are some examples of debit notes in business-to-business transactions?

    Review some examples of debit notes in business-to-business transactions and learn why debit notes would be used instead ... Read Answer >>
  2. How do you calculate credits and debits in the general ledger?

    Know the key points when balancing a ledger and why it's essential to understand the relationship between credits and debits ... Read Answer >>
  3. What happens when my bank account is debited?

    Understand the process that takes place when your account is debited. A debit to your account happens when you use funds ... Read Answer >>
  4. Who uses debit notes in business transactions?

    Read about the types of parties that are most likely to issue or receive a debit note in the normal course of business-to-business ... Read Answer >>
  5. How are debit notes to help collect on a debt?

    Learn what a debit note is and how it's associated with a debit memo request. Understand how a debit note works to help a ... Read Answer >>
  6. What is the difference between a Debit Order and a Standard Order in a bank reconciliation?

    Understand the main differences between debit orders and standard orders a company may utilize and the factors in doing bank ... Read Answer >>
Hot Definitions
  1. IRS Publication 970

    A document published by the Internal Revenue Service (IRS) that provides information on tax benefits available to students ...
  2. Federal Direct Loan Program

    A program that provides low-interest loans to postsecondary students and their parents. The William D. Ford Federal Direct ...
  3. Cash Flow

    The net amount of cash and cash-equivalents moving into and out of a business. Positive cash flow indicates that a company's ...
  4. PLUS Loan

    A low-cost student loan offered to parents of students currently enrolled in post-secondary education. With a PLUS Loan, ...
  5. Graduate Record Examination - GRE

    A standardized exam used to measure one's aptitude for abstract thinking in the areas of analytical writing, mathematics ...
  6. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
Trading Center