What is the purpose of a credit memo?

• A. To correct information on delivery invoices
• B. To request a discount
• C. To authorize a large payment
• D. To cancel an order

Answer: (A)

A credit memo is a document issued by the seller that reduces the amount a customer owes on an invoice. It records credits for things like returned goods, allowances, or correcting errors on charges, and it updates the customer’s balance accordingly. It’s a way to reflect money back to the buyer or to offset future invoices. It’s not a tool to request discounts, authorize payments, or cancel an order.