C1 - Section 12 - credit notes

Question 1

What are credit notes?

Answer 1

They are documents issued by the seller, cancelling part, or all of a sales invoice.

Question 2

What are some of the reasons credit notes are issued?

Answer 2

• Customer returns damaged or faulty goods.
• Customer returns undamaged goods by agreement with seller.
• To make a refund for short deliveries.
• To settle a dispute with a customer.
• To adjust an account after a customer takes advantage of a prompt payment discount.

Question 3

What accompanies a return of goods?

Answer 3

goods that are returned are often accompanied by a return of goods noted. This is similar to goods received note, but also has the reason why goods were returned on it.

Question 4

Who authorises credit notes?

Answer 4

All credit notes must be authorised by a supervisor prior to one being issued to the customer.

Question 5

How are credit notes calculated?

Answer 5

Credit notes are calculated in the same way as a sales invoice.
List prices should be calculated, then any trade discounts offered, and then VAT.