Accounting Multiple Choice Question – 20 September 2018

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Which of the following double-entries is the correct way to record that goods returned to XYZ Ltd, who is one of your suppliers?

Select ONE answer:

  1. Account to Debit Sales / Account to Credit XYZ Ltd
  2. Account to Debit Returns Inwards / Account to Credit XYZ Ltd
  3. Account to Debit Cash / Account to Credit Purchases
  4. Account to Debit XYZ Ltd / Account to Credit Returns Outwards

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Accounting KS5 classes.

The answer is 4 – As XYZ Ltd is a creditor, then their account is a liability to the business. As a result of returning goods to XYZ Ltd, they are now owed less money. This reduction in a liability has to be recorded by a debit entry. Entries in the returns outwards account are always on the credit side.

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