Recording Credit Purchases Flashcards
What are the six stages in a typical purchase process?
Quotation purchase order delivery note/good receive note invoice credit note remittance advice note
What is a good receive note?
An internal document completed by the buyer on receipt of the good showing and the quantity and condition of the goods received
What is the good return note?
The documents sent by the customer to the supplier detailing the goods return and the reason for their return
What is the first stage of the purchasing process?
To identify number of potential suppliers and request a quotation from each of them this is called tendering
What happens when the business has secured an acceptable quotation?
It raises a purchase order and send this to the seller
What happens when the supplier receives the purchase order?
It would arrange delivery of the goods
What will the goods be sent with?
A delivery note drawn up by the supplier
Who signed the delivery note?
The delivery note is signed by the purchasing business is proof of receipt
Who produces the good received note?
The purchaser
What happens when good to be received and check?
All documentation is passed over to the accounts department at this stage. The accounts department have a price list and quotation from the supplier its own purchase. Order a delivery note from the supplier and its own goods received note
What mess the accounts department check?
The delivery note agrees with the purchase order to ensure what was ordered has actually arrived
What might the assessment check?
Require you to check the purchase order against the good receive note or the invoice
What happens when good have been received?
The supplier was sent an invoice requesting payment for the goods
Should the invoice be checked before it’s paid?
Yes
Should the invoice be checked before it’s paid?
Yes
What happens if the businesses receives good to the faulty or incorrect?
The goods will be returned to the supplier often accompanied by a good return note detailing the reason
What should the business request from the supplier for return goods?
A credit note
What do invoices for services include?
Utilities such as electric gas or phone bills
What is the statement of account?
Business may have many transactions with the supplier on a monthly basis to supply will send a statement of account all invoices and credit notes sent to the businesses and payments received from the business during that month
What should a statement of account agree with?
The balance in the individual suppliers account in the businesses payable ledger
What could you be asked to compare when your exam?
A statement of account and the payables ledger account
What is the suppliers reconciliation?
A check of a supplier statement of account against the businesses payable ledges to identify fine reasons for any discrepancies
What is timing difference?
A reason for variance in a conciliation for example a payment has been made but not yet reached the suppliers account when the statement is prepared
How should you perform a reconciliation?
You should start by comparing the supplier statement of account to the suppliers account in the payable ledger and take off all items that agree the remaining und will show the difference
