Business Documents (Ch 1) Flashcards
What is a Quotation?
A quotation shows the customer how much the supplier will sell good for.
What is a Purchase Order?
A buyer generated document that authorises a purchase transaction.
What is a Sales Order?
A seller generated document that authorises a sale to a customer, issued after the receipt of a purchase order.
What is a Delivery Note?
A document accompanying goods dispatched to a customer explaining what the delivery contains.
What is a Goods Received Note?
An internal document completed by the purchaser that records the details of goods received and contains similar information to a delivery note.
What is a Sales Invoice?
An invoice is a document that itemises a transaction between a buyer and a seller. A sales invoice can be simply defined as the request for the buyer to make payment for goods sold or services provided by the seller.
What is VAT (sales tax)?
VAT is a consumption tax added to a product’s selling price. It represents a tax on the ‘value added’ to the product at each stage of a production or supply process.
What is Output Tax?
The tax charged on the sale of goods and services.
What is Input Tax?
The tax paid on the purchases of goods and services.
What is Net of VAT?
A net amount excludes VAT.
E.g. if you are given the net price of goods, the price excluding VAT, then the amount of VAT is 20/100 of this price. VAT is always rounded down to the nearest penny.
How to calculate standard VAT of a product?
Goods price X 20% = ?
e.g. £360 net of VAT
1) 360 x 20% = £72
2) 360 x 20/100 = £72
What is Gross VAT?
Includes VAT.
How to calculate Gross VAT?
Price X 20 / 120
e.g. £600 incl. VAT (gross)
600 X 20 / 120 = 100
What is a Statement Order?
A supplier will issue a statement of account, often at the end of each month, to show what you owe them and the transactions for the period. This will list the invoices, credit notes, discounts and any payments made.
What is Remittance Advice?
The purchaser will send a remittance advice to the seller which shows what they are paying, and which item/s the payment relates to.
What is a Petty Cash Receipt?
If a business purchases small items, a petty cash receipt will be provided by the seller. Often a business will reimburse employees who have purchased small items using their own monies.
What is a Petty Cash Voucher?
A business will also complete Petty Cash Vouchers which is an internal document detailing the business expense. The petty cash voucher will be stapled to the earlier receipt and then entered in the petty cash book, which will be covered later in your studies.
What is a Trade Discount?
The definite amount that is deducted from the list price of the goods for the supplies to some customers, with the intention of encouraging and rewarding customer loyalty.
What is Bulk Discount?
An amount deducted from the list price of goods and disclosed on the invoice. However, a bulk discount is given by a supplier for sales orders above a certain quality.
What is Prompt Payment Discount?
Also known as settlement or cash discounts, are offered to customers in order to encourage early payment of invoices.
What is a Purchase Invoice?
A document that itemises a transaction between a buyer and a seller. We now consider the situation form the customer perspective, what we previously regarded as a Sales Invoice, to the customer it is a Purchase Invoice.
What is a Credit Note?
A document sent by a supplier to a customer cancelling part or all of a sales invoice.
If goods have been returned to the supplier, due to being faulty, damaged, or not required, a credit note will be issued. A credit note can also be used to settle a dispute or adjust for a prompt payment discount.
What is a Goods Returned note?
A document sent to the supplier by the customer detailing the goods returned and reason/s for the return being made.
What is Coding?
A Code is a system of numbers, letters and symbols designed to be applied to a classified set of items, to give a brief, accurate reference, which helps entry to the accounting records, collation and analysis.
What are the different types of Code?
Customer Account Code: a unique reference given to each individual customer of an organisation.
Supplier Account Code: a unique reference given to each individual supplier of an organisation.
Product Code: a unique code given to each type of product of an organisation.
Ledger Code: a unique reference given to different types of income, expenses, assets and liabilities. It may also be referred to as a General Ledger (GL) or nominal code.
What are the different identifications for Codes?
Alphabetical: codes consisting of letters. if ordering alphabetically the order is a system whereby characters are placed in order of their position in the conventional ordering of an alphabet.
Numerical: codes consisting of numbers. If ordering numerically it can be ascending or descending.
Alphanumerical: codes are a combination of letters and numbers.
