Chapter 20- Business Documents Flashcards
Why are business documents important?
They provide a record of a business’ transactions with other businesses and customers
What is a letter of enquiry?
A letter (or email) of enquiry is sent by the buyer to the seller asking about particular items and their terms of sale
What are terms of sale?
They are the conditions attached to the sale of a product and subsequent sale. They are included in a quotation and an invoice.
What is a quotation?
A quotation is a written document that is sent by a seller to a potential buyer and shows the price of the goods and any terms of sale.
What is an order?
An order is a written document sent by a buyer to a seller requesting the supply of the quantity of goods listed.
What is an invoice?
An invoice is a document sent by the seller to the buyer with the goods or shortly after the delivery of them. It gives details of the quantity, price of the goods being sent, terms of sale and details about carriage.
What is carriage?
The transportation of goods.
What is a delivery note/ docket?
A delivery note is a document sent by the seller to the buyer that lists the items being delivered.
What is a credit note?
A credit note is a document that is sent by the seller to the buyer to decrease the amount owed by them. It is issued when goods that have been purchased on credit are returned to the seller and it would not be appropriate to provide a cash refund.
What are some terms of sale?
Delivery, E & OE, Price held, Trade discount, Cash discount, VAT, CWO, COD, Payment terms.
Delivery:
If a quotation says “carriage paid”, the seller of the goods will cover the cost of delivering the goods to the buyer. Otherwise, they will give a cost for postage or a courier.
E & OE:
This stands for errors and omissions expected. This means that the business will not be held responsible is an error has been made and can alter the price in the case that is has.
Price held:
The prices quoted might be valid for only a limited time. This encourages the customer to order quickly.
Trade discount:
This is a reduction of the selling price given to business customers. It is subtracted before the VATis added on.
Cash discount:
An extra discount may be given if the goods are paid for in a short period of time (e.g. cash discount is 5% for fourteen days). Sellers offer this extra incentive to encourage quick payment by buyers.
VAT:
This is a tax on goods and services. It must be charged on each transaction in the channel of distribution.
CWO:
Cash With Order: payment must be made when the order is placed for the goods.
COD:
Payment for the goods must be made when they are delivered.
Payment terms:
This is where details of the credit and payment terms are given. E.g. each buyer may have up to thirty days to pay for the goods.
What is a debit note?
A debit note is sent by the seller to the buyer and will increase the amount owed by them. It is used when there has been an undercharge on an account.
What is a statement of account?
A statement of account is sent by the seller to the buyer and is a summary of all the transactions between the two firms over a particular period of time. It shows the full amount owed and will act as a request for any payment still owed at the end of the month.
What is a receipt?
A receipt is a written document stating that the goods have been paid for. It is signed by the seller and given to the buyer.
