No, purchase returns and allowances are not considered a liability. Instead, they are classified as a contra expense account that reduces the total purchases or cost of goods sold on the income statement. This account reflects reductions in inventory and Accounts Payable, impacting the overall financial position of a company but not creating a liability.
Sales returns and allowances is not a liability rather these are expenses or reduction in actual sales
debit
purchase return is assets or liability or expense
A contra purchase account
Debit: Sales Returns & Allowances Credit: Accounts Receivable :)
Sales returns and allowances is not a liability rather these are expenses or reduction in actual sales
Sales returns and allowances is not a liability rather these are expenses or reduction in actual sales
debit
On the trial balance, Sales Returns and Allowances is a liability. If items returned are sold later, they become assets under sales.
purchase return is assets or liability or expense
A contra purchase account
An income account. Debit Returns & Allowances, Credit Cash.
Debit: Sales Returns & Allowances Credit: Accounts Receivable :)
Sales Returns and Allowances are contra revenue accounts because they reduce that total amount of sales. [Sales-Sales returns and allowances=Net sales]. They are reported on the income statement.
To calculate the net delivered cost of purchase, one would add purchases and freight in and then deduct purchase returns & allowances and then deduct purchase discounts.
Sales Returns and Allowances is a contra income account.
Sales Returns and Allowances