Recording Credit Purchases Flashcards
Name the six stages of the purchases process?
1) Quotation is requested
2) Order is placed - Purchase Order
3) Goods are received - Delivery note
4) Payment requested - Invoice
5) Goods may be returned - Credit note
6) Payment made - Remittance
What is tendering, why do business do this?
Tendering is where the business will recognise a number of potential suppliers and request a quotation from each. Businesses do this to make sure they get the best value for money.
When the goods have been received, what documentation will both the supplier and the buyer have?
Buyer will receive a delivery note
Supplier will receive a goods received note
What are the main points of a Goods received note?
Own sequential number
Reference to order number and delivery note number
The quantity and precise detail of the goods received are noted.
GRN is signed by the person who received the goods and the one person who checked them
If the purchaser wanted to return the goods, what document will accompany this process?
Goods returned note will be received by the supplier
Then the purchaser would also then request a credit note from the supplier.
When the invoice is sent for the goods bought by the business, what must be checked?
Invoice must be checked and made sure the details are correct. (check against order and delivery notes). Also to check that the price is calculated correctly especially if discounts have been applied.
When a credit note is received from the supplier, what must be checked by the business?
The credit note should resolve the discrepancy that took place. Make sure details and calculations are correct.
When receiving a service, what should a typical invoice contain which isn’t included on a goods invoice?
Might include utilities such as electricity, gas and phone bills.
What is sent from the SUPPLIER to the business regularly to ensure there is no errors? (monthly basis).
A supplier might provide a statement of accounts. Shows all the invoices and credit notes which have been sent and received from the business that month.
When a statement of accounts is received from a supplier, what should occur to ensure there are no errors?
A reconciliation between the statement of accounts and the suppliers individual account in the payables ledger.
When a business buys a large number goods or services from a supplier what needs to happen before someone makes the payment?
The payment needs to be authorised by appropriate personnel. Depending on how much the order is will depend on who can authorise the transaction.
When a business pays several invoices together at the end of the month, which business document will accompany this? Who will this be sent to?
Remittance advice note. Sent to the supplier.
What does BACS stand for? Whats the purpose of it?
Bank automated Clearing Services
Method of processing bulk payments through a system of direct debits and direct credits.
Where are the BACS remittance advice notes sent to?
The supplier
