When crediting a customer for a returned item, which of the following can be issued?

In situations where a customer returns an item, the appropriate action is to issue either a credit memo or a cash refund. A credit memo allows the customer to apply the returned amount towards future purchases in the system, while a cash refund provides the customer with their money back directly. This dual option gives flexibility in how the return can be handled, depending on customer preference or company policy.

Issuing a credit memo is often seen as a more efficient method for managing returns within the accounting system, as it maintains a record of both the sale and the return. Alternatively, a cash refund may be preferred in cases where the customer wishes to have their funds returned immediately.

The other choices are limited in scope. A cash refund alone does not account for the option of providing a credit memo for future purchases, while stating that only a credit memo can be issued ignores the potential for a cash refund option. A discount on a future purchase is not a direct method of crediting the customer for a return and does not fulfill the obligation related to the return of an item. Thus, the most comprehensive answer that captures the standard practices regarding returned items is the option that includes both a credit memo and a cash refund.