Question

Select the most appropriate alternative from those given below and rewrite the statement.

Return outward are deducted from __________________.
a) purchases
b) sales
c) capital
d) debtors

Answer 1

Return outward are deducted from purchases.

Explanation: Returns outward means purchases return. It is deducted from purchases because these are the goods which are returned to the suppliers; therefore, these are not to be included in the amount of purchases. To find the accurate amount of gross profit, net purchases (i.e. purchases less purchases return) are debited to the Trading Account.