Which source document provides evidence of a sales return?

Question

BlackTom AI · Accepted Answer

We start by identifying what the question asks: which source document provides evidence of a sales return, and we must evaluate each option to see which one fits.
Option a: Cheque butt. This document records a payment made by a customer to the seller, not a return. It would be relevant to cash receipts or payments, but it does not serve as evidence of reducing a previously recorded sale. Therefore, this is not the correct choice.
Option b: Invoice. An invoice is a request for payment for goods or services sold. It documents a sale, not a return. While related to sales activity, it does not indicate that a return occurred. Thus, this option does not provide evidence of a sales return.
Option c: Credit note. A credit note is issued when goods are returned or when there is an adjustment in favor of the customer, effectively reducing the amount the customer owes or creating a receivable adjustment. This directly represents evidence of a sales return and any corresponding refund or credit. This is the correct mechanism for recording a return.
Option d: Memo. A memo is a general internal communication and can accompany various transactions, but it is not a formal source document that evidences a sales return. It does not by itself document the return transaction in the accounting records.
In summary, the role of each document aligns as follows: cheques record payments, invoices record sales requests, credit notes record returns or credits, and memos convey internal notes. Therefore, the document that provides evidence of a sales return is the credit note.

Which source document provides evidence of a sales return?

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