Purchase Return and Sales Return

 Purchase Return and Sales Return

The organization usually maintain separate account for the purchase and sale return. The separate accounts provide more detail information about sales and purchase return and this information is useful for management in many ways.

Reasons for maintains Separate accounts

1. Control Cost

This is important to note that purchase and sales  involves many cost like ordering cost , transportation and handling cost, Moreover, order processing is a time consuming job. Therefor organization would like to reduce those cost,

2. Identify Product Fault

 Regular sales return will identify the product faults to the management and management can take appropriate action to resolve the product related issues in time.

3. Identify Control Weakness 

 Regular Sales return also identify the internal control weakness in the order processing and purchase processing department and management can take appropriate corrective measure to improve those controls.

4. Individual Performance

 Regular wrong order processing by sales and purchase departments also helpful to evaluate the  performance of the individual and the manager in the sales and purchase department.

5. Reputation at Stake

Regular sales return is a great damage to the organization reputation of organization and management would take appropriate steps to maintain the its Goodwill in the market.

6. Warranty Policy Review

Regular sales return would provide the useful information to the management for warranty related decision making.

7. Provision for Maintenance

Sales return record will also provide useful information to account department for determining the amount of provision is required for repair and maintenance.