A customer returns goods that were previously sold on credit. Which account is debited when the return is recorded?
Correct answer: C. Sales returns account
- A. Customer's account
- B. Sales account
- C. Sales returns account
- D. Cash account
Explanation
A sales return reduces the business's sales revenue, so the sales returns account is debited. The customer's account is credited because the amount receivable decreases.
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About Double Entry and Books of Prime Entry
Double entry records every transaction with equal debit and credit entries, based on the accounting equation and the classification of assets, liabilities, capital, income and expenses. Books of prime entry include the sales, purchases, returns and cash books, journal, and source documents used before transactions are posted to ledger accounts.
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