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Key Insights: Accounting Financial Statement Notes £2.45
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  7. Unit 2 - Financial Accounting (9706)

Lecture notes

Key Insights: Accounting Financial Statement Notes
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Accounting financial statement notes, sometimes known as "footnotes," are explanations and details that appear alongside a company's financial statements. They provide important context, clarifications, and information regarding the figures in the primary assertions. These comments assist readers, ...

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  • September 12, 2023
  • 3
  • 2022/2023
  • Lecture notes
  • Elicia wong
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Trading and Profit and Loss Accounts: Further Considerations

Returns Inwards and Returns Outwards

A large number of firms return their goods to their suppliers (Returns Outwards). Also
it is likely that through the course of the financial year that customers will return
goods to your firm (Returns Inwards). Returns Inwards (Sales Returns) and Returns
Outwards (Purchases Returns) are both recorded in the Trading Account.

Dr Returns Inwards Account Cr
2XX5 $ 2XX5 $
6 Jan. Jake (Debtor) 50
3 March Richard (Debtor) 75
6 June Blinky (Debtor) 25 31 Dec. Trading or Income St. 150
150 150


Dr Returns Outwards Account Cr
2XX5 $ 2XX5 $
12 Feb. Daley (Creditor) 80
12 Nov. Shooter (Creditor) 120
31 Dec. Trading or Income St. 220 13 Dec. Khan (Creditor) 20
220 220


B Swift (Horizontal Trading Account)
Trading & Profit and Loss Account (Income Statement) for the year ended 31.12.X5
$ $ $ $
Purchases 6240 Sales 8000
Less Returns Outwards 220 6020 Less Returns Inwards 150 7850
Less Closing Stock 600
Cost of Goods Sold 5420
Gross Profit Bal. c/d 2430
7850 7850
Gross Profit Bal. b/d 2430

B Swift (Vertical Trading Account)
Trading & Profit and Loss Account (Income Statement) for the year ended 31.12.X5
$ $
Sales 8000
Less Returns Inwards 150 7850

Less Cost of Goods Sold
Opening Stock 0
Add Purchases or Inventory 6240
Less Returns Outwards 220
6020
Less Closing Stock 600 5420
Gross Profit 2430

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