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Debit Memorandum Definition

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A debit memorandum refers to a charge against a bank account.

A debit memorandum, or debit memo, is used to notify a depositor or customer of a change, a refund or a charge on his account. A debit memorandum is typically used by a bank or a business that sells merchandise.

  1. Debit

    • A debit is an accounting term that applies to an expense or asset in a financial transaction. Debits can either increase or decrease cash, depending on the circumstance. For banks, when cash is received, it is debited because it is considered an asset to a bank; conversely, when a depositor withdraws cash from a bank, it is debited from the account.

    Banks

    • A debit memorandum is used by a bank to notify a depositor of a charge or reduction in his bank account balance, called a debit. This can be due to a check clearing, a debit card transaction or a bank fee. Oftentimes this happens because of a check that was deposited but returned due to insufficient funds.

    Businesses

    • A business that sells merchandise uses a debit memorandum to notify a buyer that it is debiting the customer's account. In this case, a debit increases the amount the customer owes. This generally happens because of a transaction error or a charge the business is adding to the customer's bill.

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