When goods and services are sold in business, it is not called actual sale because the goods and services sold may be returned. These returns may be due to various reasons like defective, wrong, breakage, etc. Management of sales return is as important as management of sales because sales return helps in calculating actual sales, revenue, stock, etc.
If the sales return transactions are less in the business then it can be easily managed without maintaining a separate book, but if the sales return transactions are high then there is a need to maintain a separate book which is called a subsidiary book. Subsidiary Book makes it easy to record and manage transactions at one place.
Table of Contents
What is a Sales Return Book?
Sales Return Book is a subsidiary book of the journal which is used to record and manage sales return transactions. Sales returns book is also known as returns inward book. In this only credit sales returns and trade sales returns are recorded as it is part of the sales book.
Sales returns are done through debit and credit notes as debit notes and credit notes are used to manage the debit and credit balance. The one who returns the goods issues a debit note because the party’s account would have been credited when he purchased the goods and the one who receives the returned goods issues a credit note because the party’s account would have been debited when he sold the goods.
Features of Sales Return Book
Following are the features of sales returns book:
1. Subsidiary Book:
Sales return book is a subsidiary book of journal as it is used to reduce the workload of journal and for proper recording and management of sales return transactions.
2. Direct Entry:
All transactions in the subsidiary book are recorded directly from the source documents because if the concept of subsidiary book is adopted then journal entry of the related transaction is not required first.
3. Only Credit Return:
Only credit returns are recorded in the sales return book because as per its concept, only credit sales return can be recorded in it.
4. Only Trade Return:
Only trade returns are recorded in the sales returns book. Trade returns means return of raw materials, finished goods etc. which are part of trade exchange. Sale return of assets is not recorded in the sale return book.
5. Easy Management:
Using the sales return book makes it easier to manage the sales return transactions as it is managed by the concerned person who has knowledge about the sales return transactions and the sales return book.
6. Error Reduction:
Sales return book helps in reducing the error as it records only the sales return transactions and is managed by the concerned person who has knowledge about it.
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QNA/FAQ
Q1. What is a Sales Return Book?
Ans: Sales Return Book is a subsidiary book of the journal which is used to record and manage sales return transactions.
Q2. Is the sales returns book a subsidiary book?
Ans: Yes, sales returns book is a subsidiary book of journal as it is used to reduce the workload of journal.
Q3. By what name is the sales return book also known?
Ans: Sales return book also known as return inward book.
Q4. Does sales return book help in reducing errors?
Ans: Yes, sales return book helps in reducing the error as it records only the sales return transactions and is managed by the concerned person who has knowledge about it.
Q5. Write the features of sales return book.
Ans: Following are the features of sales returns book:
1. Sales return book is a subsidiary book.
2. Direct entry is made in the sales return book.
3. Only credit returns are recorded in the sales return book.
4. Only trade returns are recorded in the sales return book.
5. Sales return book helps in easy management.
6. Sales return book helps in reducing errors.
