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maam this is tad bit inane, but can you explain the relationship between credit notes and refund liability. I mean if a credit note is issued then do we(/not) create a seperate refund liability?
I don’t think you need to get tied up in knots about possible differences – the important thing in AA is that you refer to something as being an accrual/liability by some name consistent with the wording of the scenario – so if the scenario refers to credit notes – call it a credit note accrual and if the scenario refers to refunds – call it a refund accrual/liability.
The credit note is a document that is the opposite of a sales invoice – so if a customer has not yet paid, the credit note cancels the invoice. The seller has no obligation to refund (cash) as well.
If the customer has paid the invoice – e.g. because it was a cash sale – a credit note “voucher” may be no use to the customer. The customer may be able to demand that cash be refunded (e.g. under sale of goods legislation or under the terms of sale). If the company needs to refund cash – the refund liability is an alternative to the credit note accrual.
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