A record of goods sent out on sale or return basis should preferably be kept in a specially ruled Day Book. In this book first memoranda entries are made; and only after the goods have been sold entries are made debiting the party and crediting the Sales Account. The auditor should refer to the memoranda record to confirm that on the receipt of acceptance from each party, his account has been debited and the sales account correspondingly credited, also that the goods in respect of which the period of approval has expired at the close of the year either have been received back subsequently or customers’ accounts have been debited. Further, that the stock of goods sent out on approval, the period of approval in respect of which had not expired till the close of the year, has been included in the closing stock.
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