Your supplier sent you stock against a consigned agreement. You transferred at the stock to owned and generated a consumption advice. An invoice was raised by the supplier and the payment made. A…

Question

Options

• AYou have to cancel the invoice and send the material back without changing the ownership.
• BReturn the material and create a debit memo for the supplier.
• CYou cannot return consigned items that are invoiced and paid. Treat the material as scrap.
• DYou have to transfer the ownership of item and perform the return transaction.

• A
  11% (5)
• B
  81% (38)
• C
  2% (1)
• D
  6% (3)

Explanation

Option B is correct because once consigned stock has been transferred to owned, invoiced, and paid, the proper procurement process for returning defective material is to physically send it back to the supplier and create a debit memo - a financial document that reduces what is owed to (or recovers funds from) the supplier, effectively reversing the payment for the returned quantity.

Why the distractors are wrong:

• A is incorrect because canceling an already-paid invoice is not the right mechanism, and returning material without addressing the ownership change ignores the financial obligation already settled.
• C is incorrect - treating usable (even if defective) stock as scrap is wasteful and incorrect; returns are absolutely possible after an invoice is paid.
• D is a common trap: the ownership transfer already happened when you moved stock from consigned to owned. There is no second ownership transfer needed - you simply return the goods and issue the debit memo.

Memory tip: Think of a debit memo as your "money-back tool" - when a supplier sends bad goods you've already paid for, a Debit memo Debits their account and gets your money back. Return the goods, raise the memo, recover the funds.

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