Question 18 of 45intermediate💡 UnderstandShort Answer3 marks

Write the difference between return Inwards and return outwards.

Correct Answer

Return Inwards (also called Sales Return) refers to goods returned by customers to the business. It is recorded in the Return Inward Journal or Sales Return Book. When goods are returned by customers like M/s Gupta Traders, M/s Harish Traders, or M/s Rahul Traders, these transactions are recorded in this book. The total of sales return is posted to the Sales Return Account in the ledger. Return Inwards reduces the sales of the business.

Return Outwards (also called Purchase Return) refers to goods returned by the business to its suppliers. It is recorded in the Purchases Return Book. When the business returns goods to suppliers like M/s Ratna Traders or M/s Bombay Fashion House, these are recorded in this book. Return Outwards reduces the purchases of the business.

Exercise: Short Answers | Q: 7
For More Understanding

Explanation

The textbook context shows Return Inwards through the Return Inward Journal example where M/s Bansal Electronics records goods returned by various traders (Gupta Traders, Harish Traders, Rahul Traders, Sushil Traders) totaling ₹4,500. The Sales Return Account is debited with 'Sundries as per sales return book'. For Return Outwards, the context references the Purchases Return Book in Illustration 5 where transactions with suppliers like M/s Ratna Traders and M/s Bombay Fashion House are recorded.

Solution Steps

  1. Step 1: Identify Return Inwards as goods returned by customers, recorded in Return Inward Journal/Sales Return Book

  2. Step 2: Identify Return Outwards as goods returned to suppliers, recorded in Purchases Return Book

  3. Step 3: Explain that Return Inwards reduces sales while Return Outwards reduces purchases

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