In case of sales return, the auditor should examine which documents?

The correct answer is D. Credit notes, inspection report and inward return notes.

A credit note is a document issued by a seller to a buyer to acknowledge the return of goods or the cancellation of a sale. An inspection report is a document that describes the condition of goods upon their return. An inward return note is a document that records the return of goods to a seller.

The auditor should examine these documents to verify that the sales return is valid and that the goods have been returned in good condition. The auditor should also verify that the seller has recorded the sales return in the correct accounting period.

Here is a brief explanation of each option:

• Option A: Credit notes, advice notes and inward return notes. This is not the correct answer because advice notes are not relevant to sales returns. Advice notes are documents that are used to notify a customer of a change in their account balance.
• Option B: Debit notes, advice notes and inward return notes. This is not the correct answer because debit notes are not relevant to sales returns. Debit notes are documents that are used to notify a customer of an increase in their account balance.
• Option C: Purchase invoices, advice notes and inward return notes. This is not the correct answer because purchase invoices are not relevant to sales returns. Purchase invoices are documents that are used to record a purchase from a supplier.
• Option D: Credit notes, inspection report and inward return notes. This is the correct answer because these documents are all relevant to sales returns. Credit notes are used to acknowledge the return of goods or the cancellation of a sale. Inspection reports describe the condition of goods upon their return. Inward return notes record the return of goods to a seller.