Explanation:

When goods are received back from customer which are sold on credit, a note is prepared and the original copy of the same is sent to the party that  returned the goods, i.e. the customer(ram). This note is termed as credit note because the customer from whom the goods are received back, his/her account is credited with the amount written in the note and on the basis of  duplicate copy of credit note the transaction is recorded in the sales return books by the supplier.