If a credit memo is issued to a customer, what happens to the customer's balance?

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Multiple Choice

If a credit memo is issued to a customer, what happens to the customer's balance?

Explanation:
A credit memo reduces what a customer owes. When a seller issues one, it creates a credit against the customer’s accounts receivable, lowering their outstanding balance by the memo’s amount. For example, if a customer currently owes $300 and $50 is credited, their balance becomes $250. It’s not a revenue item for the customer; the effect is simply a reduction in the amount payable.

A credit memo reduces what a customer owes. When a seller issues one, it creates a credit against the customer’s accounts receivable, lowering their outstanding balance by the memo’s amount. For example, if a customer currently owes $300 and $50 is credited, their balance becomes $250. It’s not a revenue item for the customer; the effect is simply a reduction in the amount payable.

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