A retail business receives a credit note from a supplier for goods returned due to damage. In which book of prime entry should the retail business record this document?

Answer options:

Sales returns day book

Purchase day book

Purchase returns day book

Cash book

How to approach this question

Identify the transaction: returning goods to a supplier. Match this to the correct day book.

Full Answer

C.Purchase returns day book✓ Correct

When a business returns goods to a supplier, the supplier issues a credit note. The business records this credit note in its purchase returns day book (also known as the returns outwards journal).

Common mistakes

Confusing purchase returns with sales returns.

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Practice the full ACCA FA — Financial Accounting Practice Exam 4

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