What a return writes in the books and in stock

A return reduces the invoice: sales and VAT are reversed, the goods go back to stock, and the customer is credited. A cash refund is then paid out as a payment voucher.

Retail POS Returns and replacements
3 min read
Updated October 20, 2026

For Accountant Supervisor or shop manager Owner

In plain words

When a return is saved:

A sales return is made against the bill, with its own number and the date and time of the return.
Sales income and VAT are reversed for the lines that came back, with their share of any discount.
The customer is credited the return amount.
The goods go back to stock, into the warehouse they left.
With Cash chosen, a moment later a payment voucher pays the amount out of the cash, and the customer's credit is cleared. With Non-Cash nothing is paid out: the credit stays on the customer.
When the company follows the IRD rules, the return is sent to the IRD as a credit note (IRD-ready invoicing at the till).

An example

A bill of Rs 1,130 (goods 1,000, VAT 130) returned in full with Cash.

When	Entry	Debit	Credit
At the return	The sales return	Sales return 1,000; VAT 130	The customer 1,130
A moment later	The payment voucher for the cash	The customer 1,130	Cash 1,130

Worked example: one shirt of three, with a discount, returned for cash

The bill was 3 shirts at 1,000, less a 10% discount of 300, plus 13% VAT of 351 on the 2,700 left: 3,051 (the rates are set up for this example). One shirt comes back, refunded in Cash. The returned share is 1,000 of goods, 100 of discount and 117 of VAT, so the return amount is 900 + 117 = 1,017.

When	Entry	Debit	Credit
At the return	The sales return	Sales return 1,000.00; VAT 117.00	The discount's own account 100.00; the customer 1,017.00
A moment later	The payment voucher for the cash	The customer 1,017.00	Cash 1,017.00

The debits at the return are 1,000 + 117 = 1,117 and the credits are 100 + 1,017 = 1,117. After the payment voucher the customer's credit is cleared. Stock: one shirt goes back into the warehouse it left. A named customer's loyalty points earned on the 1,017 are taken back.

With Non-Cash the second line does not happen: the 1,017 stays as credit on the bill's customer, to be used in a replacement (Sales replacement: exchange goods) or settled by your accountant.

Example: what a return does not undo

A bill came to 1,530. The customer spent points for a loyalty discount of 30, so the Total was 1,500, and paid 500 with a gift card and 1,000 in cash. The customer returns everything.

What	After the return
The refund choice	Only Non-Cash is offered, because the bill used a gift card: the customer is credited, nothing is paid out
The gift card	Not refilled: the 500 stays used, and your accountant settles it by hand
The 30 of loyalty discount	The points spent on it are not given back
Points earned on the bill	Taken back, in proportion to the amount returned

Common questions

Where is the return in Accounting?

Among the sales returns, with the bill number as its reference.

The cash is paid out but I cannot see the payment voucher.

It should be made a moment after the return. If it is not there after an hour, the accountant makes it by hand and tells support the return number (When the payments reach the books).

Is a return a new sale at a negative amount?

No. It is a sales return against the bill, with its own number. It reverses the sales income and the VAT of the lines that came back, with their share of any discount, and it is sent to the IRD as a credit note when the company follows the IRD rules.

Can I return one more item later?

No. A bill can be returned once. A second item needs a credit note from your accountant in Accounting.

What a return writes in the books and in stock

In plain words

An example

Common questions

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