Chapter 1 - Introduction to Business Flashcards
Describe 3 things about sole traders?
- 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
Describe 3 things about partnerships?
- 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
Describe 3 things about limited companies?
- 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
what is it - if a customer requests a quote?
quotation
what is it - if a order is placed by a customer?
sales order
what is it - if goods are delivered to the customer?
delivery note
what is it - if a payment is requested from the customer?
sales invoice
what is it - if a payment is received from the customer?
remittance advice note
when a business delivers items to a customer it will retain a copy of a?
delivery note
once a business has made a delivery of items to a customer it will request payment for those goods by sending the customer a?
sales invoice
if a customer returns goods then they should be issued with a?
credit note
when a customer sends payment to a business they should indicate which invoices they are paying by sending a?
remittance advice note
which two checks should be made before the sales invoice is sent to the customer?
- check that the calculations on the invoice are correct
- check that the delivery note was signed by the customer
5 pieces of information that you would expect to be included on a sales invoice?
- 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
list 3 of the checks that you would make before sending a sales invoice to a customer?
- the correct name and address of the customer are shown
- the invoice number and invoice date are shown
- all calculations are correct (including VAT)
explain 2 categories of sales?
- 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
Sales documents: what is a quotation?
this is sometimes requested by a customer when they are deciding which business to purchase from
what information should be included on a quotation?
- 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
sales documents: what is a sales order?
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
sales documents: what is a sales invoice/credit note?
this shows details of payment and when the customers need to pay
sales documents: what is a delivery note?
this is signed by the customer on delivery to prove they’ve received it
sales documents: what is a remittance advice?
this will clearly detail the invoices that the payment relates to and the customer will send this with the payment
who and how is a delivery note received?
it comes usually in multiple copies, one of which remaining with the customer and one returned to the supplier
explain the order of financial documents when a customer purchases goods?
- 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
