Goods Outward Journal is meant for recording all returns of goodsa)Sold on creditb)Purchased on creditc)Purchased on cashd)None of the aboveCorrect answer is option 'B'. Can you explain this answer?

Question

Answer

Purchases returns journal is a book in which goods returned to the supplier are recorded. This book is also known as returns outwards and purchases returns day book.

Goods once purchased on credit may subsequently be returned to the seller for certain reasons. For the buyer such return of goods to the supplier (seller) is know as purchases returns. The usual reasons for returning goods are:

1. Purchaser finds that the goods are unsatisfactory for some reasons, e.g. wrong color, wrong size, not according to the sample, not up to specification, not properly finished; damaged in transit, etc.

2. The purchaser is entitled by contract to return goods.

Answer

Goods outward are always use for purchase return.
who goods are purchased on credit.

Answer

Introduction:
The Goods Outward Journal (GOJ) is a record maintained by a business to track the returns of goods that have been purchased on credit. It is an important document as it helps in keeping track of all the returns and ensuring proper accounting for them. The GOJ serves as evidence of the return of goods and is useful for maintaining accurate inventory records.

Explanation:
The correct answer is option B, which states that the Goods Outward Journal is meant for recording all returns of goods purchased on credit. Let's understand why this is the correct answer.

Goods Purchased on Credit:
When a business purchases goods from a supplier on credit, it means that the payment for those goods will be made at a later date, usually after a specified credit period. In such cases, the business receives the goods and records them in the Purchase Journal as a credit purchase. However, if the business later decides to return some of the purchased goods to the supplier, it needs to record this transaction in a separate journal, known as the Goods Outward Journal.

Purpose of the Goods Outward Journal:
The Goods Outward Journal serves the following purposes:

1. Recording Returns: The primary purpose of the GOJ is to record all returns of goods that have been purchased on credit. It helps in maintaining an accurate record of the returned goods, including details such as the date of return, the quantity returned, and the reason for the return.

2. Reversing the Credit Purchase: When goods are returned to the supplier, the corresponding credit purchase entry made in the Purchase Journal needs to be reversed. The GOJ facilitates this reversal by providing a dedicated space to record the return and the corresponding decrease in the accounts payable.

3. Inventory Control: By maintaining a separate journal for recording returns, the business can keep track of the quantity of goods returned to suppliers. This helps in proper inventory management and ensures that the stock levels are accurately reflected.

4. Audit Trail: The GOJ provides an audit trail for all goods returned on credit. It serves as evidence of the return and can be used for verification during audits or internal reviews.

Conclusion:
The Goods Outward Journal is used specifically for recording returns of goods that have been purchased on credit. It plays a crucial role in maintaining accurate accounting records, reversing credit purchases, controlling inventory, and providing an audit trail. By keeping a comprehensive record of all returns, businesses can ensure proper tracking and management of their inventory, thereby facilitating smooth operations.

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