The-definition.com

Definition

Purchase returns & Allowances

Purchase return means a return of goods from the buyer to the seller for a cash refund if the purchase was for cash or, credit if the sale was made on credit.

It happens when a purchaser may be dissatisfied with the merchandise received because the goods are damaged or defective, of inferior quality, or do not meet the purchaser’s specifications.

Purchase allowance refers to a deduction made to the selling price of merchandise, granted by the seller so that the buyer will keep the merchandise.

In this situation, the purchaser may choose to keep the merchandise if the seller is willing to grant an allowance (deduction) from the purchase price.

Share it:  Cite

More from this Section

  • FOB shipping point & FOB destination
    FOB shipping point means that the seller places the goods free on board the carrier, and ...
  • Forensic accounting
    Forensic accounting is an area of accounting that uses accounting, auditing, and investigative ...
  • Notes payable
    Companies record obligations in the form of written promissory notes, called notes payable. ...
  • Cash receipts journal
    Cash receipts journal refers to a special journal that records all cash received. The ...
  • Variance
    Variance is the difference between total actual costs and total standard costs. The variance ...