Stores Returns Note (SRN)

Definition

A Stores Returns Note (SRN) is an official document used in inventory and accounting processes to record the return of goods or materials from a department or customer back to the warehouse or supplier. This document ensures proper tracking and adjustment of inventory levels and aids in maintaining accurate financial records. The SRN is typically completed when goods are returned due to defects, excess supply, or any other reason necessitating a return.

Purpose of Stores Returns Note

• Inventory Adjustment: Ensures inventory records are updated to reflect the return of items.
• Financial Accuracy: Aids in adjusting accounts and financial statements to account for the returned items.
• Accountability: Provides a record and reason for the return, ensuring transparency and traceability.

Examples

1. Defective Items: A manufacturing department returns a batch of defective raw materials to the warehouse, documenting the return with an SRN.
2. Excess Supply: A retail store returns excess stock that it could not sell within the expected period back to the supplier, accompanied by an SRN.
3. Return from Customer: A customer returns a faulty electronic device to the retailer who then sends the device back to the supplier, issuing an SRN for accountability.

Frequently Asked Questions (FAQs)

What information is included in a Stores Returns Note?

An SRN generally includes the following information:

• Date of return
• Description of the returned goods
• Quantity of goods returned
• Reason for return
• Reference number or invoice details
• Authorized signatures

Who is responsible for generating a Stores Returns Note?

Typically, the department or individual initiating the return is responsible for completing the SRN. This could be a warehouse manager, a department head, or an individual assigned to inventory control.

How does a Stores Returns Note affect financial statements?

An SRN can impact financial statements by:

• Reducing the value of inventory on the balance sheet.
• Adjusting cost of goods sold (COGS) if the returned items were already recorded as sales.
• Ensuring that any credited amount from the supplier is accurately reflected in the financial records.

Is an SRN used for both internal and external returns?

Yes, an SRN can be used for returns within a company (e.g., from one department to another) and for external returns to suppliers or vendors.

How do returned goods affect inventory management?

Returned goods require adjustments to the inventory ledger to ensure both physical and recorded inventories match. This helps mitigate discrepancies and aids in accurate future planning and purchasing decisions.

Related Terms and Definitions

• Materials Returns Note (MRN): Similar to an SRN, an MRN is used to record the return of materials in a manufacturing or production environment.
• Goods Receipt Note (GRN): A document issued to confirm the receipt of goods by a company, typically from a supplier or within its own supply chain.
• Debit Note: A document sent by a buyer to a seller, indicating a return or correction on an invoice, usually for returned goods or a disputed amount.

Online References

• Investopedia: Return Note
• Online Accounting Guidance
• Financial Definitions

Suggested Books for Further Studies

• “Cost and Management Accounting” by Colin Drury: A comprehensive text that covers inventory management, including the role and impact of return notes on financial records.
• “Principles of Inventory and Materials Management” by Richard J. Tersine: This book explores the principles and practices of inventory control, with emphasis on documentation and returns processes.
• “Financial Accounting: An Introduction” by Pauline Weetman: Provides foundational knowledge on financial records and documents, including how returns are managed and recorded.

Accounting Basics: “Stores Returns Note” Fundamentals Quiz

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