If a credit memorandum is issued, what account will be increased on the seller's books?
A) Accounts Receivable
B) Accounts Payable
C) Sales Discount
D) Sales Returns and Allowances

Question

Quizplus · Accepted Answer

A credit memorandum is issued when a buyer returns goods or wants a refund for a purchase. This will result in a decrease in the seller's revenue, which is why the Sales Returns and Allowances account will be increased on the seller's books. Options A and B are incorrect because they both represent accounts on the buyer's books, not the seller's. Option C is also incorrect because it represents a discount given to the buyer, which would not be appropriate in this situation.

If a Credit Memorandum Is Issued, What Account Will Be