The effect of a credit memo on the company's books and the bank records is as follows:
A) Increases an asset on the company's books and increases a liability on the bank's records.
B) Increases an asset on the company's books and increases an asset on the bank's records.
C) Decreases an asset on the company's books and decreases a liability on the bank's records.
D) Decreases an asset on the company's books and increases a liability on the bank's records.

Question

Quizplus · Accepted Answer

A credit memo increases the accounts receivable asset on the company's books and decreases the accounts payable liability on the bank's records.

The Effect of a Credit Memo on the Company's Books