PRC-1 · Chapter 1 · Question 97 of 100
When a credit customer returns damaged goods to 'Nova Electronics', it results in a 'Sales Return' (Return Inwards). What are the fundamental double-entry effects of this transaction?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Decrease in income (Debit), Decrease in asset (Credit)
Explanation
A sales return reduces the revenue generated (Decrease income -> Debit) and simultaneously reduces the amount owed by the customer (Decrease trade receivables asset -> Credit).
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