What is a purchase return?

A purchase return refers specifically to the return of items or stock to a supplier or trade creditor after a purchase has been made. This typically happens when goods received are defective, not as ordered, or when there is an excess stock situation. This transaction decreases the inventory balance and also impacts accounts payable, as the business will typically reduce the amount owed to the supplier.

In contrast, returning stock from a trade debtor is more about sales transactions where goods are returned by customers. Transactions involving the sale of stock do not relate to returns but rather to the initial exchange of goods for payment. Lastly, pricing methods for stock revolve around how the value of inventory is determined and do not pertain to the action of returning goods. Thus, the correct definition of a purchase return directly corresponds to the return of stock to a trade creditor.