Financial Documents for Sales Flashcards
List the flow of documents in a sales transaction.
Price quotation - purchase order - delivery note + invoice - returns note - credit note - statement/payment
What is the purpose of a price quotation?
It is an official inquiry into the price of an item.
Name 4 parts of a purchase order?
Reference number Catalogue number Quantity of goods Description of goods Price Signed and dated
When is the delivery note dispatched?
With the goods, it is then signed on receipt.
Name 4 parts of a delivery note.
Numerical reference
Method of delivery
Purchase order number and other details
Signed and dated by the recipient
What is the purpose of an invoice?
It is a trading document which specifies how much is owed to the supplier by the customer.
Whose addresses does the invoice show?
The sellers address
The address that the goods should be sent to
The address that the invoice should be sent to
Name 3 examples of coding on an invoice?
The invoice reference number
The customer account number given to them b y the business
The original reference number on the purchase order
The product code
What does the goods total show?
The amount due to the seller (before VAT)
What does the net show?
The amount due to the seller after trade discounts are applied, and before VAT is added on.
Name 3 terms of payment on an invoice.
Net monthly - must be paid within 28 days
Carriage paid - the total price includes delivery
E & OE - Errors and emissions accepted (the seller has the right to change the invoice if there is a mistake on the invoice)
What does E & OE stand for?
E & OE - Errors and emissions accepted (the seller has the right to change the invoice if there is a mistake on the invoice)
What is a credit note?
A credit note is a refund document which reduces the amount owed by the buyer which has not yet been paid.
What does balance b/f mean and where would you see this term used?
Balance brought forward, and at the start of a statement to show the amount owed at the start of the month.
List the 5 steps of calculating an invoice.
Calculate total price before discount (quantity X price)
Calculate the trade discount ((total/100) X discount)
Calculate the net price before VAT (total - discount)
Calculate the VAT ((net/100) X 20)
Calculate the total invoice price (net + VAT)
How do you calculate settlement discount on an invoice?
Calculate total price before discount (quantity X price)
Calculate the trade discount ((total/100) X discount)
Calculate the net price before VAT (total - discount)
NOW calculate the settlement discount ((net/100) X settlement discount)
Calculate the reduced net but DONT WRITE ON INVOICE! (net - settlement discount)
Calculate the VAT on this lower amount ((updated net/100) X 20)
Calculate the total invoice price USING SETTLEMENT AMOUNT VAT (net + VAT)
What is the meaning of ‘VAT exclusive’?
VAT exclusive is the total amount before VAT is added.
What is the meaning of ‘VAT content’
VAT content is the amount of a total which is VAT.
How do you calculate VAT content?
Goods total/6
How do you calculate VAT exclusive?
Total X 0.8
What is VAT?
VAT is a UK sales tax, paid by the consumer, collected by HMRC.
What is the credit limit?
The credit limit is the maximum amount that a customer can owe to the seller to the seller at one time.
What checks should be made on the invoice, name as many as possible.
Is the correct customer being invoiced? Are the goods and invoice at the correct place? Are the correct goods being sent? Are the product details correct? Are the calculations correct?
What happens if a discrepancy is found before the document is issued?
It is handed back to the person who made the mistake for a new issue to be made.
Name 2 reasons that coding is used in accounting.
Instant and accurate way of referencing customers and documents.
It enables documents to be filed in an efficient way.
How long should accounting records be kept for?
Every business should have a file retention policy of 6 years to adhere to legal requirements.
