Business Documents

Question 1

Define invoice

Answer 1

An invoice is a document issued by the supplier of goods on credit,showing details,quantities and prices of goods supplied

Question 2

What does a invoice contain

Answer 2

-the name and address of the supplier
-the name and address of the customer
-the date
-full details,quantities and prices of the goods supplied

Question 3

Define debit note

Answer 3

A debit note is a document issued by a purchaser of goods on credit to request a reduction in the invoice received

Question 4

State reason why a supplier may allow a customer trade discount

Answer 4

-to encourage customers to buy in bulk and also to allow the customer to make a profit when they sell the goods

Question 5

What is the difference between trade discounts and cash discount

Answer 5

-Cash discount is not shown as a deduction from an invoice and is only allowed if the invoice is paid within a set time limit
-trade discount varies according to the quantity purchased and appears as a deduction on an invoice

Question 6

State reasons why a customer may send a debit note to a supplier of goods on credit

Answer 6

-to notify the supplier of damaged goods
-to notify the supplier of an overcharge
-to notify the supplier of any shortages
-to notify the supplier that the goods are not what was ordered

Question 7

Define credit note

Answer 7

A credit note is a document issued by a seller of goods on credit to notify of a reduction in an invoice previously issued

Question 8

What is in a debit note

Answer 8

-the name and address of the supplier
-the name and address of the customer
-the date
-full details and quantities of the goods returned or overcharged

Question 9

What is in a credit note

Answer 9

-The name and address of the supplier
-the name and address of the customer
-the date
-full details,quantities and prices of the goods returned or overcharged

Question 10

State reasons why a supplier may send a credit note to a customer

Answer 10

-to notify the customer of a reduction in an invoice
-to notify of an overcharge on an invoice
-to acknowledge goods returned by the customer
-to notify the customer that a claim for a reduction in the debit note has been accepted

Question 11

Define statement of account

Answer 11

A document issued by the seller of a goods on credit to summarise the transactions for the month

Question 12

What do statements of account contain

Answer 12

-the name and address of the supplier
-the name and address of the customer
-the date
-the avalanche owing at the start of the period
-invoices and credit notes issued
-payments received
-any cash discount allowed
-the balance owing at the end of the year

Question 13

State one purpose of a statement of account

Answer 13

-to notify the customer of the balance owing at the end of the month
-to remind the customer of the amount due or the date that payment is due
-to provide the customer with a summary of the transactions for the month
-to allow the customer to check their records to ensure no errors have been made

Question 14

Define cheque

Answer 14

-a cheque is a written order to a bank to pay a stated sum of money to the person or business named on the credit

Question 15

Define receipts

Answer 15

A receipts is a written acknowledgment of money received and acts as proof of payments