CHAPTER 1 Flashcards
Business Transaction and Documentation
Business
A commercial organisation, large or small, which exists to make money or profits for its owner
Types of business transaction
Cash & Credit
Credit transaction
Sale or purchase which occurs some time earlier than cash is received or paid
Cash transaction
Buyer pays cash to the seller at the time the goods or services are transferred
Profit
Excess of income over expenditure
Entity
People join together to achieve a common end
Business
- Organisation existing to trade and make a profit , inluding sole trader
- NOT include charity/local authority
Company
Entity constituted in a particular legal form, usually involving limited liability,, need not to be business(charity)
External documentation
- Letter of inquiry
- Quotation
- Sales order document
- Acknowledgment
- Delivery note
- Invoice
- Credit note
Internal documentation
- Purchase order
- Inventory list
- Supplier list
- Staff schedules
- Good received notes
- Expense claim
Purpose of accounting system
Record, summarise and present the information contained in the documentation generated by transactions
Sales order
Customer writes out order/signs an order for goods/services want to buy
From supplier –> customer
Confirming order after purchase order is received
Purchase order
Business places an order with another business for purchases of goods/services
Invoice
A demand for payment
Contain of invoice
- Name & address (seller)
- Name & address (purchaser)
- Invoice number
- Date of transaction
- Description of sale
- Quantity & unit price
- Total amount invoice
- Details of sale tax
Other possible details :
- Delivery address (when goods want to be delivered to other premises)
- Referencing (order number)
- Date by which payment is due
‘Net 30 days’
Payment is due 30 days after the date of delivery
3 different uses of Invoice
- Invoice as receipt of payment (Cash transaction)
- Invoice sent from seller to buyer and paid on receipt of the goods (COD invoice)
- Invoice sent after goods have been delivered, pay within certain time (Credit Invoice)
FOB (detail on invoice)
“Free on Board” - supplier pays all costs of carriage up to point of shipping (import/export invoice)
E&OE (detail on invoice)
“Error and omissions excepted” - supplier reserve the right to make alterations to the details as shown on the invoices
Ex works (detail on invoice)
Price excludes the cost of delivery
How many copies of invoices usually?
4 copies
* To purchaser
* Kept in file copy (prove)
* Delivery note (customer sign then send back)
* Advice note (signed and kept by purchaser)
Credit note
To cancel part or all of previously issued invoice(s)
Debit note
Issued by customer requesting credit note
Debit note (sent by SUPPLIER to customer)
Adjust UPWARD the amount on an invoice already issued (terkurang charge)
Goods received note (GRNs)
- To record a receipt of goods
- In addition to suppliers’ advice notes
- Checked against supplier invoice before making a payment
Trade discount
- A reduction in the cost of goods
- Buy goods in bulk
- Important/regular customer
Settlement/cash discount
- Optional reduction in the amount payable to supplier
- Prompt payment
- Calculated with net price after trade discount
Rebate
Example : Reduction in bills for the following year
Allowance
Example : Buy 50 units and business gives you extra units FREE of charge
Sales tax
Output : Sales
Input : Purchases
Gross price
= Net price + Sales tax
Sales tax calculated after?
Any discounts applied have been deducted
Retention policy
Sets down how long different kinds of information are retained
Master/reference file
Never thrown away/ Update from time to time
Temporary/Transitory file
Eventually scrapped (etc; transactions file)
Active file
Frequently used
Non-active file
No longer used on a day to day basis
Semi-active files
Contain info still active but OTW to be inactive
What to do with files no longer needed?
1) Archive : retain in its ori form, store somewhere else
2) Securely destroyed
3) Retain on back up servers/cloud
Cloud
- Off site
- 3rd party
- Computer storage space
Retention periods under …
Companies Act 2006 (UK)
Simple legal contract retention period
6 years
How long to retian documents if it is more important ??
12 years
What regulate information stored about individuals?
General Data Protection Regulations / Data Protection Legislation
Does it covers data about corporate bodies ?
No !! - it covers data about INDIVIDUALS only
Data controllers
Organisations/individual who control the purposes and means of processing personal data
Data processor
Processing personal data on behalf of a data controller
- have legal liability for any breach may occur
List 6 Data Protection Principles
1) Lawfulness, fairness & transparency
2) Purpose limitation
3) Data minimisation
4) Accuracy
5) Storage limitation
6) Integrity & confidentiality
