Final answer:
Credit memos are issued to adjust a customer's account balance, reflecting any returned goods or allowances. They are part of financial transactions that maintain accurate account records, but are not related to the management of accounts receivable, customer service strategies, or notification of balances due.
Step-by-step explanation:
The issuance of a credit memo is a common financial transaction used to adjust a customer's account balance. The correct answer to the question 'Credit memos are normally issued to:' is A) Adjust the customer's balance to the amount owed to the company because of returned goods or an allowance. A credit memo acknowledges that a customer may not owe the full original amount, either because they've returned items or they've been granted an allowance. When this happens, the balance is reduced to reflect the return or allowance, not to assist in the aging of accounts receivable, reduce frustration and sales losses, or inform the customer of the balance due.
Understanding how credit works is essential in business. For example, when a credit card is used, money is immediately transferred from the credit card company's account to the seller, and subsequently, at the end of the month, the card user owes the money to the credit card company, essentially taking on a short-term loan. Carrying a balance on a credit card entails making at least a minimum payment every month, and interest is charged on any outstanding balance, increasing the total amount owed.