In sales ledger control account, returns inwards is usually

Assessment: JAMB UTME - Principles of Accounts - 2012 Subject: Financial Accounting

Question 1 Report

In sales ledger control account, returns inwards is usually
Answer Details
Returns inwards refer to the goods returned by customers to the business. When a customer returns goods, the business will need to reduce the amount of sales made on credit to that customer. In the sales ledger control account, returns inwards are credited, and sales returns are debited. This means that the sales ledger control account is reduced by the amount of returns inwards, and the sales returns account is increased by the same amount. The reason for this is that returns inwards represent a reduction in the amount owed by customers (i.e., a reduction in the accounts receivable balance), and sales returns represent an increase in the amount of goods returned to inventory. Therefore, the returns inwards are credited (reducing the accounts receivable balance), and the sales returns are debited (increasing the inventory balance). To summarize, the correct answer is: credited and sales returns debited.
Read lesson note on Ethics In Accounting (JAMB)
Read lesson note on Control Accounts And Self-balancing Ledgers (JAMB)
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