Question

Marks
1.
=12
(a) State with reasons, whether the following statements are True or 6x2
False:
(i) Goods sold on approval
or return basis are not recorded as credit
sales initially when they are sent out.

Answer 1

Answer:

false

they are recorded as sales irrespective of whether the customer might accept or reject the goods at the end of the period given for the approval

Answer 2

The statement is False

Explanation:

When goods are sold on approval or return basis, they are recorded as normal credit sales. the entry for that is passed as :-

                                 debtors a/c      dr.     xx

                                                           to sales a/c    xx

if in that time period the buyer accepts the goods, or does not return the goods, then no entry needs to be passed.

but, if the buyer return the goods, the sales entry passed before will be reversed :-

                  sales a/c      dr.     xx

                                to debtors a/c     xx

so, in case of sales on approval or return basis the goods are recorded like normal sales to debtors.