SAP Financial Accounting (SAP FI) Practice Exam

When issuing a credit memo, which two accounts are typically involved?

1. Accounts payable and revenue

2. Accounts receivable and expense

3. Accounts receivable and revenue

4. Revenue and cash

The correct answer is: Accounts receivable and revenue

When issuing a credit memo, the two accounts that are typically involved are accounts receivable and revenue. This is because a credit memo is used to decrease the amount that the customer owes to the business. When a credit memo is issued, it directly affects the accounts receivable balance. This account represents money that customers are expected to pay for goods or services rendered. By issuing a credit memo, the accounts receivable balance is reduced to reflect the new, lower amount owed. Simultaneously, the revenue account is also impacted because the credit memo represents a reversal of previously recognized revenue. If a customer is given a credit due to a return or an adjustment, the business must decrease its revenue by the amount specified in the credit memo, aligning the accounting records with the actual financial situation. This combined decrease in both accounts accurately reflects the transaction's impact on the business's financial statements, ensuring that the revenue is not overstated and the accounts receivable reflects the correct amount owed by customers.