A: Let's first clarify what this means. Creditors allowances is basically all instances where creditors (people we owe money to) have allowed us to return items we purchased from them on credit.
The "creditors allowances" (returns of items purchased on credit) is recorded in the creditors allowances journal.
The creditors allowances journal is simply a book that is kept to record all instances that your business has returned items it purchased on credit. It would be the opposite of the creditors journal.
The creditors journal is similar to the purchases journal, with the difference being that the purchases journal only includes purchases of inventory on credit (also known as goods, stock), while the creditors journal includes all items purchased on credit (e.g. equipment, inventory, consumables, etc.).
An entry in the creditors allowances journal is passed once our business issues a debit note, which is a document created by a buyer when goods that were bought on credit are being returned.
From what I understand this type of journal (accounting book) is not used everywhere around the world, only in certain regions.
Is the creditors allowances journal used in your part of the world?
Do you have more info or questions about the creditors allowances journal?
If so, leave us a comment below.
Best, Michael Celender Founder of Accounting Basics for Students