Refund Accounting  Refund Accounting involves the recording and financial treatment of returned payments or product refunds in a company’s books. It ensures that revenue, liabilities, and expenses accurately reflect the economic reality of a refund event. Key steps in refund accounting: 

• Reverse revenue recognition if the sale had been previously recognized. 

• Record a refund liability if the refund is pending. 

• Adjust inventory balances for physical goods. 

• Handle tax implications if taxes were applied to the original transaction. 

Accurate refund accounting is critical for compliance with GAAP or IFRS standards and provides a transparent view of customer satisfaction and product return trends.