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Sales returns is known as customer return which is returned due to damage,unsatisfying and exchange.
And purchase returns means to send any items to the supplier because of many reasons eg,manufacture defect,damage,items name different etc.
Purchase return not effect to the book of account but sales return will effect to the book of account due to the customer returned.
Sales return , Inward Return is the return from the buyer , it happens when the sold goods were not aacording to the specification or damaged , Because of this our books also effect so we have to reduce that from our sales value , if sold those goods on credit basis our accounts receivables also have to reduce.
Purchase return or Out ward Return is the return by us to the supplier of those goods , it happenes when the goods were not according to the specifications or damaged. Because of out ward return our books also effect , so we have to reduce from our purchase value , if we buy those goods on Credit bases our accounts paybles also decreased .
Thank you
Sales Return
Sales returns, or returns inwards, are a normal part of business. Goods may be returned to supplier if they carry defects or if they are not according to the specifications of the buyer.
Accounting for Sales Returns
There is need to account for sale returns as though no sale had occurred in the first place.
Hence, the value of goods returned must be deducted from the sale revenue.
If sale was initially made on credit, the receivable recognized must be reversed by the amount of sales returned. If the sales in respect of the returns were made for cash, then a payable must be recognized to acknowledge the liability to reimburse the customer the amount he had paid for those purchases.
Purchase Returns
Purchases returns, or returns outwards, are a normal part of business. Goods may be returned to supplier if they carry defects or if they are not according to the specifications of the buyer.
Accounting for Purchase Returns
There is need to account for purchase returns as though no purchase had occurred in the first place.
Hence, the value of goods returned to the supplier must be deducted from purchases.
If purchase was initially made on credit, the payable recognized must be reversed by the amount of purchases returned. If the purchases in respect of the goods returned were made for cash, then a receivable must be recognized to acknowledge the asset resulting from the expected reimbursement to be received from the supplier in respect of the returned goods.
A Purchase Return Order is the reverse of a Purchase Order. You can post a shipment from it (sending things back to the vendor) which reduces inventory. You can post a credit memo from it (to reverse the accounts payable), which affects G/L. If you post a Purchase Credit Memo directly, and you post it, I believe it automatically posts a shipment to take care of inventory.
A Sales Return Order is the reverse of a Sales Order. You can post a receipt from it (reveicing things that the customer sends back into inventory) which increases inventory (depending on how you have this set up of course). You can post a Sales Credit Memo from it, which reduces the Accounts Receivable. You can also create a Sales Credit Memo directly, and when you post that I believe it will automatically post a receipt to take care of inventory.
Sales return is when a products is sold and is being return by the customer. This will be added back to your FG inventory and a decrease in sales. it will also affect receivable or cash account.
Purchase return is when you buy goods and you return them to your supplier. This will be deducted to your inventory and a decrease in liability if it's recorded as payable or it will be recorded as a recievable if you have paid for it.
Sales Return:- When sold goods are returned back into the business. Account is debited as goods are coming into the business.
Purchase Return:- When purchased goods are returned back to the company in which the goods were purchased from. Account is credited as goods are leaving the business.
Sales return is a less income while purchase is a more expensess in a business.
sales return which effect our sales volume it may cause our negative impact on our weekly, monthly or quartly sale target. generate low margin aganist target. purchase will increase risk of high store inventory if sale come return it will have huge in stock. It will create high stock and low sale in book of account.
Sales return is when a products is sold and is being return by the customer. This will be decrease in sales. it will also affect cash account.
Purchase return is when you buy goods and you return them to your supplier. This will be decrease in liability if it's recorded as payable.
Sales return is an operational expense because the item that you sold to the customer, has been returned for some reason, may be not the product is damaged but, it might be not up to his expectations and that is a big loss so, this loss makes it an expense.
Purchases are of two kinds mostly; one inventory and in that case purchase becomes asset for the company while, daily purchases like frequent maintenance items shall be classified as an expense items.
