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CA Foundation · Accounting · Accounting Process

In the ledger of Kapoor Enterprises, the Sales Returns Rs 4,000 from customer Vikas was entered in the Sales Returns Book. While posting to the ledger, the accountant should:

Debit Sales Returns Account and credit Vikas's Account with Rs 4,000. The return reduces sales and reduces the amount receivable from Vikas, so the debtor's personal account is credited while Sales Returns, which is a nominal account for losses or reductions, is debited.

  1. ADebit Sales Returns Account and credit Vikas's Account with Rs 4,000Correct
  2. BDebit Vikas's Account and credit Sales Returns Account with Rs 4,000
  3. CDebit Sales Account and credit Vikas's Account with Rs 4,000
  4. DCredit both Sales Returns Account and Vikas's Account with Rs 4,000

Explanation

Goods returned by a customer reduce sales and also reduce the amount Vikas owes. Sales Returns (an expense/contra-revenue) is debited and Vikas, a debtor whose balance falls, is credited. Option 2 reverses the entry, which would increase Vikas's debt.

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