2.4 Business Documentation

Question 1

1. What are financial statements?

Answer 1

• documents produced by an organization to show the financial status of a business at a particular time, including the income statement and statement of financial position.

Question 2

2. What are the 5 business documents?

Answer 2

• Purchase order.
• Invoice.
• credit note.
• statement.
• Remittance Advice.

Question 3

3. What is purchase order?

Answer 3

Sent by buyer to order goods from supplier.

Question 4

4. What book of original entry is it entered in purchase order?

Answer 4

• purchases day book

Question 5

5. What is invoice?

Answer 5

• sent by supplier to buyer when goods are delivered advising of amounts owed.

Question 6

6. What is debit note?

Answer 6

sent from buyer to credit supplier to return debit supplier for returning the goods.

Question 7

7. What is a credit note?

Answer 7

• sent by supplier to buyer to credit buyer for the return of goods.

Question 8

8. What is a statement of account?

Answer 8

sent by supplier to buyer showing transaction to month end and amount due.

Question 9

9. What is remittance advice?

Answer 9

Accompanies payments by cheque or via BACS(bankers’ automated clearing system) and gives details of the payment.

Question 10

What is claimant?

Answer 10

someone who claims something, especially money.

Question 11

What is a countersign?

Answer 11

• sign a paper that has already been signed by someone else.

Question 12

What an advantage of only accepting cash sales?

Answer 12

Cash would be received faster , resulting in improved cash flow/liquidity.

Question 13

What is a disadvantage of only accepting cash sales?

Answer 13

Some customers may not wish to make cash purchases resulting in lost
turnover/lower profits