GOODS RETURNED TO A SUPPLIER IS

• A. Debited to returns outward account
• B. Credited to returns outwards account ✓
• C. Debited to returns inwards account
• D. Credited to returns inwards account

When goods are returned to a supplier, it means that the products have been sent back due to various reasons such as defects, damages, incorrect items, or overstock. In accounting, this transaction needs to be recorded accurately to reflect the change in inventory and financial position of the company.

The correct accounting treatment for goods returned to a supplier is to credit the returns outwards account. This means that the value of the returned goods is recorded as a credit in the returns outwards account, which is a contra account to purchases. By doing so, it reduces the cost of purchases and reflects the decrease in inventory due to the return of goods.

On the other hand, if goods are being received from a customer (goods returned by customers), it would be debited to returns inwards account. Returns inwards represent goods that were originally sold by the company but have been returned by customers for various reasons.

In summary, when goods are returned to a supplier, it is credited to returns outwards account as it represents goods going out of the company’s inventory back to the supplier.