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Chapter 4
4.2 Accounting for purchase returns and sales returns
Goods purchased which have been returned to the supplier are known as either
'purchase returns' or 'returns outwards'. Goods returned by a customer are known
either as 'sales returns' or 'returns inwards'.
When the statement of profit or loss is prepared, any returns inwards must be offset
against sales income and any returns outwards must be offset against purchases in
arriving at gross profit.
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