Which of the following is a form prepared by the vendor showing the amount deducted for returns and allowances?

• A. Credit memorandum
• B. Debit memorandum
• C. Purchase order
• D. Invoice

Answer: (A)

Verified step by step guidance

1. Understand the context of the question: The problem is asking about a document prepared by the vendor to show the amount deducted for returns and allowances. This is a common scenario in financial accounting related to sales returns and allowances.
2. Review the definitions of the options provided: A 'Credit Memorandum' is a document issued by the seller to the buyer, indicating a reduction in the amount owed due to returns or allowances. A 'Debit Memorandum' is typically issued by the buyer to request a reduction in the amount owed. A 'Purchase Order' is a document created by the buyer to request goods or services. An 'Invoice' is a document issued by the seller to request payment for goods or services provided.
3. Focus on the key term 'prepared by the vendor': Since the vendor is the one preparing the document, this eliminates options like 'Debit Memorandum,' which is prepared by the buyer.
4. Match the purpose of the document to the correct term: The document showing the amount deducted for returns and allowances aligns with the definition of a 'Credit Memorandum,' as it is issued by the vendor to adjust the buyer's account.
5. Conclude the reasoning: Based on the definitions and the context provided, the correct answer is 'Credit Memorandum,' as it is the document prepared by the vendor to show the deduction for returns and allowances.