Narendra,
Before I created the above post, I had verified/ checked the postings in IDES, by taking an invoice (sales doc category = M) and a credit memo (sales doc category = O).
From my understanding, the sales document type instructs the system to debit or credit the customer revenue account based on the sales document category (if you see all else is same in between the various billing types, in VOFA).
I hadn't changed the value of sales doc category from M to O or anything like that because generally one does not change the sales doc cat. of a billing type.
Depending upon which process is being configured the respective billing type is taken and a copy of the same is created.