Return Inward is deducted from purchases.

Question

State whether the following statement is True or False.

Return Inward is deducted from purchases.

Options

• True
• False

Answer 1

False

Explanation: Returns inward represent sales return. So, these must be deducted from the amount of total sales. Sales return (i.e. returns inward) are the goods that are returned to the firm by the customers. Hence, the figure of net sales, i.e. sales less sales return, is credited to the Trading Account.