The correct answer is A. A credit memo created from a return authorization has no impact on inventory, however, a stand-alone credit memo does impact inventory.
When a credit memo is created from a return authorization, the inventory item that was returned is already removed from the inventory. Therefore, the credit memo does not affect the inventory quantity since the inventory quantity has already been reduced when the item was returned.
On the other hand, when a stand-alone credit memo is created without a return authorization, it means that the customer is receiving a credit without returning any items. In this case, the inventory quantity is not reduced because the customer is not returning any items, but the value of the inventory may be impacted by the credit memo.
The inventory impact of credit memos from return authorization is recorded upon entry of Return Receipt. Return authorization -> Credit Memo -> Return Receipt
A credit memo is a transaction that decreases the amount a customer owes you.
You can use a credit memo to reverse a charge you billed to a customer. For example, a customer returns part of an order after you've issued an invoice. Enter a credit memo to decrease the amount of this open invoice.
If a customer receives a credit memo after having paid an invoice, this memo can be applied to any of the customer's open or future invoices.
A credit memo created from a return authorization has no impact on inventory; however, a stand-alone credit memo does impact inventory.
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