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What effect does return outward and return inward has on statement of financial Position and statement of profit or loss
Returns inwards reduce the sales figure in the SOPL. Returns outwards reduce the purchases figure in the SOPL. Neither of them have any affect on the SOFP (returns inwards will have reduced the receivables during the year, and returns outwards will have reduced the payables during the year, but the SOFP is showing the balances on receivables and payables as at the end of the year).
I explain both of these in my free lectures. The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
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