Accounts Payable Certification Practice Test

Which invoice scenario allows for an adjustment through a credit or debit memo?

1. An invoice that is paid in full

2. An invoice that wasn't previously validated

3. An invoice marked for cancellation

4. An invoice with an accounting entry created

The correct answer is: An invoice marked for cancellation

When considering scenarios involving the adjustment of an invoice through a credit or debit memo, the case of an invoice marked for cancellation is significant. An invoice marked for cancellation indicates that the goods or services billed are no longer required or that there has been an error in billing. In such circumstances, the process of cancellation allows the accounts payable department to officially negate the original invoice, which typically necessitates the issuance of a credit memo to remove the obligation from the company's financial records. Similarly, if the invoice was previously paid in full, there would be no further adjustments needed as the transaction is already complete. An invoice that wasn't previously validated would not typically involve a credit or debit memo until it goes through the proper validation process. Lastly, an invoice with an accounting entry created implies that the invoice has been recorded in the system, and adjustments may be more complex rather than straightforward credit or debit memos. Therefore, the scenario involving an invoice marked for cancellation is the most appropriate context for making adjustments through credit or debit memos.