Subsidiary Books: Sales Return Book MCQs Quiz | Class 9
This quiz is for Class 9 students studying Elements of Book-Keeping & Accountancy (Code 254), focusing on Unit 4: Journal. It covers key concepts related to the Sales Return Book, including returns inward, the basis of credit notes, and the fundamentals of journal entries for returned goods. Attempt all questions and click ‘Submit Quiz’ to see your score and download a PDF of your answers.
Understanding the Sales Return Book
The Sales Return Book, also known as the Returns Inward Book, is a special purpose subsidiary book used in accounting to record goods returned by customers. These are goods that were previously sold to them on credit. This book helps in systematically managing and tracking all sales returns, which simplifies the posting process to the ledger.
Key Concepts and Principles
1. Returns Inward
When goods sold to a customer are returned by them for any reason (e.g., defect, wrong item, not as per sample), it is termed as “Returns Inward”. This is because the goods are physically coming back into the business premises. The Sales Return Book is specifically maintained to record these inward returns.
2. Credit Note Basis
The primary source document for recording an entry in the Sales Return Book is a Credit Note. When a customer returns goods, the seller prepares a Credit Note and sends it to the customer. This note serves as an official confirmation that the customer’s account has been credited (i.e., their debt to the business has been reduced) by the value of the returned goods. Each credit note is serially numbered for reference.
3. Entries and their Basics
Only the return of goods sold on credit is recorded in the Sales Return Book. Key points to remember are:
- Cash Sales Returns: Returns of goods that were originally sold for cash are not recorded here. They are usually handled through cash refunds and recorded in the Cash Book.
- Return of Assets: If an asset (like old furniture) sold on credit is returned, it is not recorded in the Sales Return Book. Such entries are made in the Journal Proper.
- Double Entry Effect: When goods are returned by a customer, two accounts are affected:
- Sales Return Account: This is an expense/loss for the business, so it is debited. (Rule: Debit all expenses and losses).
- Customer’s Personal Account: The customer is no longer liable to pay for the returned goods, so their account (as a debtor) is credited to reduce their balance. (Rule: Credit the giver).
Format of a Sales Return Book
A typical Sales Return Book has the following columns:
| Date | Particulars (Name of Customer) | Credit Note No. | L.F. (Ledger Folio) | Amount |
|---|---|---|---|---|
| 2023-04-10 | M/s. Verma Traders | 015 | 5,000 | |
| 2023-04-18 | Gupta & Sons | 016 | 2,500 |
Posting to the Ledger
Individual entries from the Sales Return Book are posted to the credit side of the respective customer’s account daily. Periodically (e.g., monthly), the total of the ‘Amount’ column of the Sales Return Book is posted to the debit side of the Sales Return Account in the General Ledger.
Quick Revision Points
- The Sales Return Book records only returns of goods sold on credit.
- It is also called the Returns Inward Book.
- The source document for an entry is the Credit Note.
- Cash sales returns are recorded in the Cash Book.
- Return of assets is recorded in the Journal Proper.
- The total of the Sales Return Book is debited to the Sales Return Account.
- Individual customer accounts are credited with the amount of goods returned.
Practice Questions
- What is the journal entry for goods returned by a customer, Ramesh?
- Why is the return of an old machine sold on credit not recorded in the Sales Return Book?
- Who prepares a Credit Note and to whom is it sent?
- What is the other name for the Sales Return Book?
- If the total of the Sales Return Book for May is Rs. 15,000, how will it be posted in the Sales Return Account?
