Business documents Flashcards
What is the purpose of accounting?
To record and classify business transactions.
List 8 types of business transactions.
Credit sales Cash sales Credit purchases Cash purchases Paying cash into the bank Withdrawing cash from the bank Owners drawings Other expenses either paid from the bank or with cash
What is the purpose of business documents?
To record the financial transactions undertaken by a business so that they can be recorded into an accounting system
List the three types of discount and describe what they are used for
Trade discount- to encourage customer loyalty
Bulk discount- for sales orders above a certain quantity
Prompt payment- to encourage early payment of invoices
What is a code
A system of numbers, letters and symbols assigned to a classified set of items in order to give a brief accurate reference.
Why are coding systems used in accounting (2 reasons)
To find information quickly
To file similar documents together
What are owners drawings
Money that the company’s owner has withdrawn from the business for personal use.
What is the difference between cash and credit purchases?
Cash: customer offers payment immediately and in full before taking goods
Credit: customer takes goods / services and agrees to pay at a later date
What is credit?
The amount of time a customer can take before paying for goods / services
List 5 ways that a purchase order can be made
Telephone
In writing
Fax
Website
List 3 ways to check a customers creditworthiness
Trade references
References from their bank
Credit checking agencies
List the 5 steps in an accounting system
Business transaction
Business documents
Books of prime entry
Ledger accounts
Trial balance
What are books of prime entry?
Where transactions and details from business documents are first recorded (also called day books).
List 5 types of business documents
Price quotation
Purchase order
Sales order
Delivery note
Sales invoice
What is a trial balance
A list of all the ledger accounts in the accounting system. Used as a control to check that transactions have been recorded properly.
List the 6 main steps for a credit transaction
Price enquiry
Price quotation
Purchase order
Sales order
Delivery note
Sales invoice
(Credit note)
Define purchase order
A buyer generated document that authorises a purchase transaction
List 6 things that should be present on a quotation
Supplier name & address & contact details
Customer name & address
Today’s date
Details of goods
Price being quoted
Authorisation signature
What 3 things should be checked when making a purchase order
The price is as quoted
Delivery terms
Any discounts applicable
List 6 things that should be on a purchase order
Name and address of customer
Name and address of supplier
Order date
Sequential order number
Vat reg number of business placing the order
Authorisation signature
Define sales order
A seller generated document that authorises a sale to a customer.
Issued after the receipt of a purchase order.
List 4 things that a sales order confirms.
Quantity / type of goods or service
Date of supply
Delivery address
Price & payment terms (& discounts available)
Describe the 3 parts of a delivery note
1- kept by the customer (to compare to the purchase order & sales invoice)
2- signed and returned to the supplier (evidence that the goods have been received in good condition)
3- signed and kept by the delivery organisation (evidence that they have delivered the items in good condition)
Define delivery note
A document accompanying goods despatched to a customer. Explains what the delivery contains.
Define goods received note.
An internal document completed by the purchaser that records the details of goods received.
