How do you record a vendor credit in QuickBooks?

• A. Enter a negative line item on an existing bill
• B. Delete the bill and recreate it with a negative amount
• C. Enter a credit memo in the Enter Bills window by hitting Credit instead of Bill.
• D. Issue a separate refund to the vendor

Answer: (C)

Recording a vendor credit involves documenting a credit memo, not modifying existing bills with negative amounts. In QuickBooks, you create the credit by entering a credit memo in the Enter Bills window and choosing Credit rather than Bill. This creates an actual vendor credit that reduces your Accounts Payable and can be applied to an open bill or used against future purchases. It keeps the audit trail intact and reflects the credit properly in your payables.

Other approaches don’t fit the workflow. Entering a negative line item on a bill doesn’t create a proper vendor credit and can lead to reconciliation issues. Deleting and recreating the bill loses history and skews records. Issuing a separate refund is a separate transaction that doesn’t link the credit to your outstanding payable, which is why a credit memo is the correct method to record a vendor credit.