Which of the following best describes the use of a credit memo form?

• A. To authorize refunds to customers
• B. To adjust supplier invoices for price differences
• C. It is used to account for missing, returned, or spoiled items
• D. To request additional stock from suppliers

Answer: (C)

A credit memo form is used to document adjustments with a supplier when there are discrepancies in deliveries. It creates a formal record that reduces the amount owed to the supplier (or adds a credit to your account) due to issues with received goods. The most common scenario is to account for missing items, returns, or spoiled items, so inventory counts and cost records reflect what actually arrived. This helps keep purchasing, receiving, and accounting aligned and ensures you aren’t paying for goods you didn’t receive or can’t use. While it can reflect price differences on invoices in some cases, its primary purpose in foodservice cost control is to handle missing, returned, or spoiled items. It isn’t used for customer refunds or for requesting additional stock from suppliers.