What financial term describes returns of goods previously purchased by a company?

The financial term that accurately describes the returns of goods previously purchased by a company is "purchase returns." This term refers specifically to situations where a buyer returns goods to the seller, which typically occurs due to defects, overstocking, or other issues that make the goods unsuitable for use.

When a company returns items it has purchased, it decreases its inventory and also reduces the amount that it needs to pay to the supplier. This transaction impacts the financial statements by adjusting both the inventory account and accounts payable, making it a critical aspect of accounting for inventory management and supplier relationships.

The other options, while they may sound similar, address different concepts. For instance, "goods returns" could be interpreted more broadly and is not the standard term used in accounting. "Returns on sales" usually pertains to the financial performance aspect, namely the revenue generated from sales after deducting returns, while "return on investment" is a metric used to assess the profitability of an investment relative to its cost. These distinctions clarify why "purchase returns" is the most precise term for returns of previously bought goods.