State and explain two accounts that record any increase in stock.

State and explain two accounts that record any increase in stock.

Answers

- Purchases Account
- Return Inwards Account

Purchases Account
Records purchases of additional goods either on credit or cash.

Returns Inwards Account (Sales Returns Account)
Records return of goods previously sold by a business its customers or debtors. Goods may be returned for various reasons like being; faulty, wrong type of goods or oversupply.
Return inwards may relate to cash sales or credit sales. Goods returned in relation to a cash sale that was initially made, cash is refunded to the customer.
Return inwards in relation to a credit sale that was initially made, cash is not refunded to the debtor.
- Accounting Treatment for Return inwards relating to Cash Sales:
Debit : Return inwards Account
Credit : Cash/ Bank Account or Cashbook
- Accounting Treatment for Return inwards relating to Credit Sales:
Debit : Return inwards Account
Credit : Debtors Account
- Accounting treatment for Return inwards in the trading account:
Return inwards is deducted from SALES AMOUNT

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Kavungya answered the question on August 17, 2021 at 07:45

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