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In this lecture, the definition of a credit memorandum is explained according to the 22nd edition of fundamental accounting principles. A credit memorandum is a notification from the issuer that the recipient’s account has been credited in the sender's records, indicating the customer owes money, but the company is reducing the owed amount for various reasons. The term "credit" in credit memorandum reflects a reduction in the accounts receivable ledger for a specific customer. For example, when a customer purchases inventory with an IOU, the sales account increases, while the inventory account decreases accordingly.