Question

Which of the following statements is incorrect in relation to accounting for a Credit Note received from a supplier?

• A. Post the amount on the Credit Note to the debit of the supplier's personal account
• B. Enter the particulars in a Purchases Returns Day Book
• C. Post periodical total of amounts on Credit Notes to the credit of Returns Outwards a/c
• D. Debit the amount of the Credit Note to the Purchases account

Answer 1

Answer: (D)

Debit the amount of the Credit Note to the Purchases account

All the statements are correct except debit the amount of the credit note to the purchases account. When a credit note is issued the amount of credit note is debited to the supplier's personal account, and entered in the purchases return day book, it is also added that is credited to the purchase return book and credited to the purchases account.