Is a sales return an expense?
Consequently, what type of account is sales returns?
sales returns definition. Merchandise that was returned to the seller by a customer. This account is a contra sales account. When merchandise sold on credit is returned, this account is debited and Accounts Receivable is credited.
Additionally, is sales return an asset? Record the Return Cash and accounts receivable are balance sheet asset accounts. The sales account is an income statement account. Properly recording the return is a key element and an absolute necessity to keep the books accurate.
Simply so, are returns an expense?
The cost of goods sold is a business expense. There is no contra account (like sales returns and allowances) when recording a return. Instead, the amount of cost of goods sold simply decreases.
Is sales return a debit or credit?
The seller records this return as a debit to a Sales Returns account and a credit to the Accounts Receivable account; the total amount of sales returns in this account is a deduction from the reported amount of gross sales in a period, which yields a net sales figure. The Sales Returns account is a contra account.