Sales Book and Sales Return Book: Know the Accounting Basics

Sales Book and Sales Return Book are essential accounting records used by businesses to track sales transactions and returns accurately. These books play a crucial role in maintaining comprehensive financial records and ensuring transparency in business operations. Every business, big or small, involves a number of sales transactions on a daily basis. A small enterprise might make a hundred sales a day while a large corporation could record thousands or even tens of thousands of sales. Not all sales transactions end in a successful exchange. There are instances when items are returned due to various reasons such as incorrect product, product defects, or unsatisfactory customer experience. Therefore, it is crucial to record all transactions pertaining to sales and sales returns to keep track of the daily or periodic sales and returns.

Sales book and sales return book is a very important topic to be studied for the commerce related exams such as the UGC-NET Commerce Examination.

In this article, the readers will be able to know the following:

• Defining a Sales Book
• Understanding a Sales Return Book
• Difference Between Purchase Return Book and Sales Return Book 

Defining a Sales Book

A sales book, also referred to as a book of original entry or a subsidiary book, is a tool used to record credit sales of goods. Cash sales are recorded separately in the cash books while credit sales of assets other than goods are recorded in the journal proper.

The term 'goods' in this context refers to the items that a business sells as part of its primary sales function. The invoice provided to the buyers of the goods serves as the source document for the financial entry.

Understanding a Sales Return Book

A sales return book, also known as Return Inwards Book, is one of the eight subsidiary books in accounting. It is the original book of entry where transactions pertaining to the return of sold goods are recorded. If returns are not a frequent occurrence, the transactions can still be recorded.

Cash basis returns are not recorded in the Sales return book.

There can be several reasons why a customer might return goods:

• The product is faulty or of poor quality.
• There was a delay in the delivery of goods to the customer.
• The sold goods do not match the original description or sample.
• The supply of goods exceeds the demand.
• A breach of contract occurs between the buyer and the seller.

When goods are returned to the business, a record is made by issuing a credit note in favour of the buyer, indicating that their account has been credited.

Difference Between Purchase Return Book and Sales Return Book 

Here's a table outlining the key differences between a Purchase Return Book and a Sales Return Book:

Conclusion

The Sales Book and Sales Return Book are integral components of the accounting process for businesses engaged in selling goods on credit. These books provide a systematic and organized record of sales transactions and returns, facilitating accurate financial reporting, inventory management, and analysis of sales performance.

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