Final answer:
A credit memo is the document that indicates a reduction in the amount owed by a customer due to returned goods or an allowance, not to be confused with a bill of lading, sales invoice, or monthly statement.
Step-by-step explanation:
A credit memo indicates a reduction in the amount due from a customer because of returned goods or an allowance. This document serves as a notification to the customer that their account has been credited in the amount of the returned items or the given allowance. The process of issuing a credit memo typically involves documentation that supports the reason for the credit, such as return of goods due to damage, defects, or other valid reasons for dissatisfaction.
A bill of lading is a document issued by a carrier to acknowledge receipt of cargo for shipment. A sales invoice represents a request for payment for goods or services provided. Lastly, a monthly statement is a summary of all transactions, including credits and debits, that occurred over the course of a month.
When dealing with accounting and sales, understanding these terms is crucial for accurate financial management and customer relations. The correct choice for this particular question is 'credit memo'.