Financial Documents Flashcards
What is the purpose of financial documents?
To ensure an accurate record is kept
What does each document contain?
It contains information linked to the different stages of the buying process
Credit note
To correct an error on a customer account
Purchase order
To identify goods ordered from a supplier
Receipt
To confirm a customer has paid a bill
Statement of account
Summary of recent transactions between company and customer, including outstanding payments. Used with customers who buy goods regularly
Delivery note
When goods are received to a buyer, check materials when they arrive from suppliers and details and explains contents
Goods received note
When goods are received, confirms all goods have been received
Invoice
Details of the amount owed from a delivery, when it has to be paid and ways to pay
Turnover
Total revenue a business receives
Costs of sales (direct costs)
The costs that are involved in directly marketing a product and would include raw material, wages, packaging
Gross profit
Profit a business makes before taking into account other expenses (indirect costs)
Expenses (indirect costs)
The other expenses a business has to pay which are indirectly associated with what the business sells or makes.
Eg: bills, fuels, advertising, salary, insurance
Flow diagram
Turnover minus cost of sales = gross profit minus expenses = net profit
Why are financial documents important ?
Helps the business to calculate revenue, costs, profit/loss
Business will have a record of customers so they can send out information about new products or promotions
Mistakes can be checked and rectified meaning better customer service
Business will have a accurate record that ensure they pay the correct amount of tax
