chapter 6: debtors and creditors journal

Question 1

explain the importance of checking invoices against delivery notes and purchase orders

Answer 1

to verify ;
- that the correct goods have been receive
- that the correct quantities have been received
- that the amount charged on the invoice corresponds with the amount on the purchase order

Question 2

why is the creditors journal used?

Answer 2

book of first entry used to record credit purchases, useful because;
- it provides total credit purchases amount for the month
- reduces the amount of entries in the purchases account
- provides the purchases figure needed to draw up the control account
- for inventory control purposes

Question 3

differentiate between trade and cash dicount

Answer 3

trade discount- reduction received from a supplier when purchasing large quantities of goods
cash discount- discount for prompt payment, seller gives this discount to encorage the buyer to pay their accounts on time.

Question 4

why is the debtors journal used?

Answer 4

book of first entry used to record credit sales, useful because;
- provides total credit sale amoun for the month
- reduces the number of entries in the sales account
- for inventory conrol purposes

Question 5

explain errors and omissions excepted (e&oe)

Answer 5

these letters appear on the invoice to indicate that the document issued may contain errors and the supplier accepts the right to make changes to the document