Question

Accounting entries in the Return outward book are recorded on the basis of credit note.

• A. True
• B. False

Answer 1

The correct option is B False

When goods are returned, a debit note is prepared and is sent to the supplier with the returned goods.

An original copy is sent to the supplier, informing him of the amount for which his account has been debited on account of the returned goods.

A duplicate copy of the debit note becomes the source document, on the basis of which entries are recorded in the purchase return book.

Thus a debit note is required for recording the transactions in the purchase return book.