Business-Exam 2

Question 1

the documents prepared to record the details of a transaction.

Answer 1

source documents

Question 2

what are four things accurate and up-to-date source documents do?

Answer 2

1. make it easier to complete and prepare the annual financial reports
2. provide details for the preparation of BAS
3. help to avoid penalties for neglecting to keep records required by law
4. contain additional useful information, usually not part of the accounting entries.

Question 3

Common features in most source documents (4):

Answer 3

• date the transaction occurred
• the name and address of parties
• the nature of the transaction
• the amount of money involved

Question 4

what kind of storage systems would most businesses use for their financial records?

Answer 4

a combination of paper and computer

Question 5

what does GST mean?

Answer 5

Goods and Services Tax

Question 6

What is GST?

Answer 6

a broad-based tax of 10% on most goods and services consumed in Australia

Question 7

what can GST registered organisations do?

Answer 7

They can claim an input tax credit for the GST included in the price of goods and services they buy

Question 8

How do you claim GST back?

Answer 8

lodge a Business Activity Statement

Question 9

who should keep record of all GST collected and paid?

Answer 9

the Treasurer

Question 10

what is the formula to FIND GST?

Answer 10

formula: y/11=GST amount

Question 11

formula to find ADDED GST?

Answer 11

formula: y x 0.10 = GST

y + answer = TOTAL AMOUNT

Question 12

what will GST be included in?

Answer 12

• cash register summaries
• cash purchases
• cash receipts
• sundry expenses

Question 13

What will GST NOT be included in?

Answer 13

• payment of settlement accounts
• wages
• donations
• raffle and social proceeds

Question 14

What items are exempt of GST?

Answer 14

Health and Medical e.g. health insurance
Educational supples and childcare e.g. school fees
Fresh food and beverages e.g. vegetables

Question 15

which source documents go from the buyer to the seller (2)?

Answer 15

• purchase order

- cheque

Question 16

which source documents go from the seller to the buyer (4)?

Answer 16

• tax invoice
• consignment note
• adjustment note
• statement of account

Question 17

what is a purchase order?

Answer 17

a document used to place an order for goods or services

Question 18

how can these be placed? (6)

Answer 18

• faxed, .mailed or emailed
• telephone
• using a Personal Digit Assistant (PDA)
• seller can come to buyer
• buyer can go to seller
• trade shows

Question 19

what is a tax invoice?

Answer 19

a bill provided to a customer after receiving an order, indicating the goods or services purchased and the amount owing. Tax invoices must always be issued, except when the supply is under $50 and the customer has not requested one

Question 20

on receipt of the tax invoice the purchaser should? (4)

Answer 20

• Double-check all tax invoice calculations, including the GST and trade discount
• Contact the supplier if any discrepancies are found so they can be quickly rectified
• Record the due date for payment of the debt
• Follow the procedures to ensure that payment is made within the designated timelines.

Question 21

What do these abbreviations mean:

• N/7
• 2/7
• 2/7; N/30
• EOM

Answer 21

• Net seven days- the debt must be repaid within seven days
• A 2% discount can be deducted from the tax invoice if the debt is repaid within seven days
• a 2% discount applies if the debt is repaid within seven days, or repay the full amount within thirty days
• Account to be settle by the last day (end) of the month

Question 22

What is a consignment note?

Answer 22

are prepared when goods are ready to be despatched to the purchaser, often referred to as con-note)

Question 23

How can they be prepared?

Answer 23

manually or produced electronically

Question 24

Before goods are despatches, what should the supplier check?

Answer 24

• the order has been filled as requested
• the goods are appropriately packaged for transportation
• the delivery details are correct
• the goods can be delivered in time

Question 25

what are adjustment notes?

Answer 25

also known as credit notes, they are almost identical to tax invoices and are prepared for a variety of reasons

Question 26

reasons for adjustment notes:

Answer 26

• the product delivered is damaged
• overcharged
• under supplied