Answer to Question #167607 in Accounting for Milan

Question

When you credit an Expense? What does this mean?

Debit Inventory

Credit COGS

• What does this journal entry mean?
• I know it means that the inventory you sold is returned. So, I know inventory is an asset, so we are getting back our inventory, so how is it an increase if someone returns our product.
• Credit COGS - You are giving the payment back to the customer, so expenses decreases.

Please correct me if needed. Thank you.

Answer 1

The statement from is correct, it has no corrections.

It true the inventory that was sold sold is returned.Inventory is an asset, so we are getting back our inventory, so it is an increase if someone returns a product to the firm.

Credit COGS - You are giving the payment back to the customer, so expenses decreases.