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Explain the accounts that record any decrease in stock.

Explain the accounts that record any decrease in stock.

Answers

Sales Account
Records sale of goods either on credit or cash.

Returns Outwards Account (Purchases Returns Account)
Records return of goods previously bought by a business. The goods are returned to the suppliers or creditors.
Return outwards may relate to cash purchases or credit purchases. Goods returned in relation to a cash purchase that was initially made, cash is refunded to the business firm by the supplier.
Return outwards in relation to a credit purchase that was initially made, cash is not refunded to the business firm by the creditor.
- Accounting Treatment for Return Outwards relating to Cash Purchases:
Debit : Cash/ Bank Account or Cashbook
Credit : Return Outwards Account
- Accounting Treatment for Return Outwards relating to Credit Purchases:
Debit : Creditors Account
Credit : Return Outwards Account
- Accounting treatment for Return Outwards in the trading account:
Return outwards is deducted from PURCHASES AMOUNT

Drawings Account (Goods Drawing)
Drawings in the form of Goods arises when the owner(s) of the business takes out some of the business goods out of the stock or purchases made for his own use.
- Accounting Treatment for Goods Drawing:
Debit : Drawings Account
Credit : Purchases Account

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Kavungya answered the question on August 17, 2021 at 07:46

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