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Business > Ch. 20- Managing Business Transactions (documents) > Flashcards

Ch. 20- Managing Business Transactions (documents) Flashcards

1
Q

DIFFERENT business documents

A

-Letter of Inquiry (b)
-Quotation (s)
-Order (b)

-Delivery docket (s)
-Invoice(s)

-Letter of complaint(b)
-Credit notes (s)

-Statement of account(S)
-Cheque
-Receipt

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2
Q

General treatments for documents

A

File a copy
Check name and address are correct

(Use for all)

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3
Q

Treatment: Letter of inquiry

A

Buyer:
()

Seller:
Send quotation back

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4
Q

Letter of Inquiry

A

Sent by buyer
To fin information on product and service availability, prices and delivery options

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5
Q

Quotation

A

Gives information about prices, delivery options, products,discounts and terms of sale. Eg free delivery

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6
Q

Treatment: Quotation

A

Buyer:
-compare quotations for best deal
-Check terms of sale
-Compare again letter of enquiry

Seller:
()

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7
Q

Order

A

Request from buyer to seller to send the goods and terms outlined in quotation

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8
Q

Treatment: Order

A

Buyer:
()

Seller:
-check stock levels
-check credit rating

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9
Q

Delivery Docket

A

Provides proof that goods were delivered and have them checked before signing docket.

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10
Q

Treatment: Delivery Docket

A

Buyer:
-Check correct goods delivered

Seller:
-Check details according to the order

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11
Q

Things you would find on a quotation:

A

-Telephone number
-Quotation number
-Name and address of buyer amd seller
-Description of goods
-VAT
-Trade discount

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12
Q

Invoice

A

Sent by selller outlining quantity, prices, description of goods and any discounts.

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13
Q

Treatment: Invoice

A

Buyer:
-Check calculations
-Check goods are correct as per order

Seller:
-Check calculations
-Check details are correct.

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14
Q

Letter of complaint

A

Only sent by buyer if goods are incorrect, damaged and a replacement or discount are requested.

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15
Q

Treatment: Letter of complaint

A

Buyer:
- Identify problem
-Check details are correct

Seller:
-Investigate problem
-Check details

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16
Q

Credit Note

A

From seller to buyer, an alternative to cash.
Can order different goods from that company for same amount.

17
Q

Treatment: Credit note

A

Buyer:
-Check credit note price is same as amt. charged
-Check goods listed are goods returned

Seller:
- Check goods listed are goods returned

18
Q

Statement of Account

A

Seller to buyer at the end of month outlining money opened (Transactions + money owed)

19
Q

Treatment: statement of account

A

Buyer:
-Check calculations are correct

Seller:
-Check all transactions are on statement
-Check calculations

20
Q

Cheque

A

Payment from buyer to seller for goods purchased

21
Q

Treatment: Cheque

A

Buyer:
-Complete cheque correctly and counter foil (cross-check for safety)

Seller:
-Chcek details are correct
- Check it is signed

22
Q

Receipt

A

Proof of purchase

23
Q

Treatment: Receipt

A

Buyer:
-Check details correct

Seller:
-Complete receipt
-Check amount is correct

24
Q

Debit note and treatment

A

If amount on invoice is incorrect, seller will send a debit note showing correct amount.

Buyer and seller must both check calculations

25
Q

How to check creditworthiness?

A

-Ask for reference from bank
-Ask to provide trade reference from other firms they have done business with
-Look at customers accounts
-Pay credit enquiry agency

26
Q

Why do companies sell on credit

A

-Encourages people to buy - increase profit
- Match competitions who sell on credit
- gives customers time to raise money to pay for goods

27
Q

How to reduce bad debts?

A
  • Offer discounts to customers paying early
    -Stop selling on credit - only cash
    -Take out insurance eg. Bad debts
    -Send out invoices early so customers do not forget to pay
28
Q

How do bad debts affect a business

A

-reduces profits
-can make business go bankrupt

29
Q

Mark up formula

A

Profit/cost price x 100

30
Q

Effective purchasing

A

-choose supplier with best deal

31
Q

Trade discount

A

Reduction in prices to encourage people to buy in bulk

32
Q

Stock control

A

System where you never have too much or too little

  • computerised stock system
33
Q

Stocktaking

A

Counting amt of stock in warehouse ata particular time

34
Q

DISADVS of too much stock

A

-can go out of date
-Money tied up in stock ( not able to be used for anything else)
- Insurance costs are higher
- extra storage space

35
Q

DUSADVS of too little stock

A

-loss of sales - no stock to sell
-Less profits
-loss of regular customers to competitors

36
Q

Optimum level for stock

A

Best and most efficient level for the firm
Not too high or low

37
Q

Factors to consider for stock level:

A

-Storage - do you have enough
-costs- insurance higher when you have more stock
-Level of consumer demand eg Christmas, summer
-Type of stock - perishable or durable

38
Q

Stockout

A

Too little stock
Loss of sales

Business (24 decks)

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