Returns inwards and outwards

Emilie Registered Posts: 37 Regular contributor ⭐

I am just not getting my head round returns in wards and outwards. Am i correct in thinking that they go on the P&L account. But where abouts.




  • wolfe
    wolfe Registered Posts: 121 Dedicated contributor 🦉
    return inwards are sales returns so the treatment is to dedct it from sales figure. the resultant figure is net sales.

    the returns outwards are purchase returns so deduct it from the purchases figure.
  • Bookworm55
    Bookworm55 Registered Posts: 479 Dedicated contributor 🦉
    Yes they do get included in the P&L, by adjusting the sales and purchases figures.

    Returns inwards are goods the company has sold, but have been rejected and returned by the customers. The sales need to be 'un-accounted' for; so you deduct returns inwards from sales.

    Returns outwards are goods the company has bought, but have rejected and returned to their supplier. The purchases need to be 'un-accounted' for; so you deduct returns outward from purchases.
  • A-Vic
    A-Vic Registered Posts: 6,970 Beyond epic contributor 🧙‍♂️
    Sales returns are a cost to a business

    Where as Purchases returns are a plus (take from purchases - so it would be:-

    Opening stock +
    Purchases (purchase Returns) -
    Closing stock
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