Debit Memorandum Definition - What is a Debit Memorandum? HD

Debit memorandum definition including break down of areas in the definition. Analyzing the definition of key term often provides more insight about concepts. Debit memorandum can be defined as: Notification that the issuer (sender) has debited the recipient’s account in the sender’s records. Debit memorandum is a term that can confuse people about the term debit, debit simply meaning the amount on the right side of a ledger. A debit memorandum is still referring to a debit, amount on the right side of the ledger, but we need to keep in mind whose ledger we are talking about. Debit memorandum refers to the issuers books. For example, bank may issue a debit memorandum to a checking account for bank services chargers. To the bank the debit memorandum is debiting a liability account, the amount due to us, lowering the liability, but to us it is decreasing our cash balance, the debit memorandum leading to us crediting our cash account in order to lower it.