Question

Write short note on the following.

Importance of credit memo

Answer 1

A credit memo is the source document that is issued in case of credit sale. This is issued by a seller to a buyer when the goods are sold on credit. It is also known as a bill or an invoice.

Importance of Credit Memo
The following points highlight the importance of credit memo.
1. It acts as a basis for recording transactions in the books of accounts.
2. It acts as evidence that the credit sale has taken place.
3. Credit sales of a business can only be verified through this voucher.