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Understanding Returns: Debit and Credit Transactions for Inward and Outward Returns

This guide explains the accounting treatment for returns in business transactions, focusing on returns inwards and returns outwards. When goods are returned to suppliers, the supplier's account is debited, and the returns outwards account is credited. Conversely, when goods are returned by customers, the returns inwards account is debited while crediting the supplier's account. This process helps maintain accurate financial records and uphold the integrity of inventory.

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Understanding Returns: Debit and Credit Transactions for Inward and Outward Returns

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  1. Starter Debit or Credit?

  2. Returns inwards Returns outwards • Debit the supplier’s a/c • Credit the returns outwards a/c • Debit the returns inwards a/c • Credit the supplier’s a/c

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