Subsidiary Books: Purchase 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. The questions cover key concepts of the Purchase Return Book, including returns outward, the basis of debit notes, and fundamental accounting entries. Attempt all questions and submit your answers to see your score and download a PDF of your answer sheet.
Understanding the Purchase Return Book
In business operations, it’s common to return goods to a supplier for various reasons such as receiving damaged items, incorrect products, or goods of inferior quality. When goods that were originally purchased on credit are returned, these transactions are recorded in a special purpose subsidiary book known as the Purchase Return Book or Returns Outward Book.
Key Concepts Explained
1. Purchase Return (Returns Outward)
A purchase return occurs when a business sends back goods to the supplier from whom they were purchased. From the perspective of the business returning the goods, this is termed “Returns Outward” because the goods are physically going out of the business premises back to the supplier.
2. The Debit Note
The Debit Note is the source document for recording entries in the Purchase Return Book. It is a document prepared by the buyer and sent to the supplier (creditor) to inform them that their account is being debited for the value of the goods returned. A debit to a creditor’s account reduces the amount of money the business owes them. A debit note typically contains:
- The name of the supplier whose account is debited.
- Details of the goods being returned (quantity, description, price).
- The reason for the return.
- The date of the return.
3. Accounting Entries and Ledger Posting
The fundamental journal entry for a purchase return is:
Supplier’s Account (Creditor) Dr.
To Purchase Return Account
Here’s why: The supplier’s account (a liability) is debited to decrease the amount owed to them. The Purchase Return Account is credited, as it represents a reduction in the business’s total purchases (an expense-like item).
- Individual entries from the Purchase Return Book are posted to the debit side of the respective supplier’s account in the Creditors’ Ledger.
- The periodic total of the Purchase Return Book is posted to the credit side of the Purchase Return Account in the General Ledger.
Format of a Purchase Return Book
The structure of a Purchase Return Book is straightforward, designed to capture all necessary information for each return transaction.
| Date | Debit Note No. | Name of Supplier | L.F. | Amount (Rs.) |
|---|---|---|---|---|
| (Date of Return) | (Unique Number) | (Name of the Creditor) | (Ledger Folio) | (Value of Goods) |
Note: ‘L.F.’ stands for Ledger Folio, which is the page number of the supplier’s account in the ledger where the posting has been made.
Quick Revision Points
- The Purchase Return Book only records the return of goods that were bought on credit.
- It is also called the Returns Outward Book.
- The source document used for making entries is the Debit Note.
- A Debit Note is prepared by the buyer (the one returning the goods).
- Returning goods reduces the business’s liability to its supplier.
- The return of an asset (like machinery or furniture) is not recorded in this book; it is recorded in the Journal Proper.
- The final balance of the Purchase Return Account is transferred to the credit side of the Trading Account.
Practice Questions
- Why is the return of goods purchased for cash not recorded in the Purchase Return Book?
- What is the main difference between a Debit Note and a Credit Note?
- If a business returns goods worth Rs. 2,500 to “ABC Traders”, which account will be debited and by how much?
- What happens to a business’s total creditors when goods are returned?
- Why is it important to state the reason for return on a Debit Note?
