BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Returns can be thought of as the opposite of the transaction that they relate to. Sales are a form of income so go on the credit side of the trial balance. ‘Sales returns’ will reduce the income generated from sales (as some of the customers sent the goods back) so go on the debit side.

Detailed explanation-2: -Both sales and discount received will be shown on the credit side of the trial balance.

Detailed explanation-3: -Sales are a form of income so they go on the credit side of the trial balance. Sales returns, on the other hand, will reduce the income generated from sales as the customers return the purchased goods, and so will go on the debit side. Sales return as a contra revenue account is a debit entry in the books of accounts.

Detailed explanation-4: -In the sales revenue section of an income statement, the sales returns and allowances account is subtracted from sales because these accounts have the opposite effect on net income. Therefore, sales returns and allowances is considered a contra‐revenue account, which normally has a debit balance.

Detailed explanation-5: -The rules for preparing a trial balance are as follows: All the assets must be recorded on the debit side. All the liabilities must be recorded on the credit side. All incomes or gains must be recorded on the credit side.