Chapter 1 - Introduction to Business

Question 1

Describe 3 things about sole traders?

Answer 1

• business is owned by a single individual
• business is not a separate legal entity from the sole trader
• sole trader has unlimited liability for the debts of the business

Question 2

Describe 3 things about partnerships?

Answer 2

• business is owned by several individuals
• business isn’t a separate legal entity from the partners
• partners have unlimited liability for the debts of the business

Question 3

Describe 3 things about limited companies?

Answer 3

• business can be owned by one or many individuals (the shareholders)
• business is incorporated as a separate legal entity from the shareholders
• the shareholders have limited liability for the debts of the business up to the amount that they paid for their shares

Question 4

what is it - if a customer requests a quote?

Answer 4

quotation

Question 5

what is it - if a order is placed by a customer?

Answer 5

sales order

Question 6

what is it - if goods are delivered to the customer?

Answer 6

delivery note

Question 7

what is it - if a payment is requested from the customer?

Answer 7

sales invoice

Question 8

what is it - if a payment is received from the customer?

Answer 8

remittance advice note

Question 9

when a business delivers items to a customer it will retain a copy of a?

Answer 9

delivery note

Question 10

once a business has made a delivery of items to a customer it will request payment for those goods by sending the customer a?

Answer 10

sales invoice

Question 11

if a customer returns goods then they should be issued with a?

Answer 11

credit note

Question 12

when a customer sends payment to a business they should indicate which invoices they are paying by sending a?

Answer 12

remittance advice note

Question 13

which two checks should be made before the sales invoice is sent to the customer?

Answer 13

• check that the calculations on the invoice are correct
• check that the delivery note was signed by the customer

Question 14

5 pieces of information that you would expect to be included on a sales invoice?

Answer 14

• the name and address of the business sending the invoice
• the list price of each product
• the date that the invoice was issued
• the number of units of each product type that were delivered
• the invoice number

Question 15

list 3 of the checks that you would make before sending a sales invoice to a customer?

Answer 15

• the correct name and address of the customer are shown
• the invoice number and invoice date are shown
• all calculations are correct (including VAT)

Question 16

explain 2 categories of sales?

Answer 16

• cash sales are settled immediately by the customer
• credit sales is when a customer is given a period of time (credit period) before they have to pay for what they’ve bought

Question 17

Sales documents: what is a quotation?

Answer 17

this is sometimes requested by a customer when they are deciding which business to purchase from

Question 18

what information should be included on a quotation?

Answer 18

• title and description of goods/service to be supplied
• price including any potential discounts for bulk orders or prompt payment
• terms and conditions which’ll relate to the sale

Question 19

sales documents: what is a sales order?

Answer 19

this will communicate the quantity and type of goods required, the agreed unit price and total value, and may give additional info on specific design or delivery requirements that a customer has

Question 20

sales documents: what is a sales invoice/credit note?

Answer 20

this shows details of payment and when the customers need to pay

Question 21

sales documents: what is a delivery note?

Answer 21

this is signed by the customer on delivery to prove they’ve received it

Question 22

sales documents: what is a remittance advice?

Answer 22

this will clearly detail the invoices that the payment relates to and the customer will send this with the payment

Question 23

who and how is a delivery note received?

Answer 23

it comes usually in multiple copies, one of which remaining with the customer and one returned to the supplier

Question 24

explain the order of financial documents when a customer purchases goods?

Answer 24

• purchase order is to be sent to the supplier
• a delivery note will come from the supplier detailing when the goods are delivered, quantities, and description
• a purchase invoice will be received from the supplier requesting payment
• a remittance advice will be sent to the supplier with payment