Hello there, WCSW,
The memo reduces the amount that your customer owes to you. The credit issued can be for part or all the respective invoiced amount and is posted against the customer's outstanding balance.
A credit memo affects the bottom line. The cost into the inventory is lost, so when a credit memo is posted it has a direct effect on net income.
You can learn more about credit memos in this article: Give your customer a credit or refund in QuickBooks Desktop for Windows.
I'll be right here if you have further questions about this.
