Selling Goods and Services Flashcards

1
Q

what is a cash sale?

A

goods or services paid for immediately

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

how can a cash sale be made? (list five)

A

cheque
debit card
bank transfer
coins and notes
even credit card

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

how can a credit card be a form of cash sale?

A

because the bank pays immediately but the individual pays the bank at a later date

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

what three prices must be recorded in the business books for cash sales?

A

net price
VAT
gross price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

what is a credit sale?

A

when goods and services are bought but payment is made later by the customer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

why do businesses allow credit sales to other businesses?

A

this encourages the customer to make more purchases and then pay later as it helps with the individuals cash flow, this also helps the business if they are selling items on credit which allows them to also pay their supplier with better cash flow

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

how can a business ensure payment from credit customers?

A

by running a credit check to ensure the customer and agreeing on a payment which outlines how much a customer can owe at a time and when they should pay it off

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

which documents are involved in making in a sale? (list three)

A

customers need to be made aware of the price (catalogue/advertisement etc)
the same price must be listed on the invoice
some businesses may give a quotation or estimation regarding the service

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

what is a quotation?

A

this price cannot be changed once the customer has accepted it, there may be additional factors which may change the price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

what is an estimation?

A

a rough idea based on guesswork of the job, this amount can be negotiable depending on circumstances

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

what is a purchase order?

A

a legal document once the order has been accepted by the supplier this creates and contract between both seller and buyer
larger businesses will need to issue purchase orders (customer orders) unlike smaller businesses with all the information surrounding the order

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

what does a purchase order include? (list 7) QUIPDAI

A

individual reference number
product code if available
quantity
description of the goods
unit price and total price (not necessary but useful for accuracy)
authorising signature and date
invoice and deliver address

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

what is a sales order, and what does it contribute towards in the business?

A

this can be raised from a purchase order by the seller which lists what the customer has bought, this can be kept to help with stock and when to purchase

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

what is an advice note?

A

this confirms that the seller has accepted the order and explains when the goods will be delivered if the delivery is not immediate or if they are on their way

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

what is a delivery note?

A

sent with the deliveries to the buyer who then determines if the goods are satisfactory and then will sign two forms

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

why are there two forms signed by the buyer when the items are delivered?

A

one retained by the buyer and passed onto the account and the other given back to the supplier as proof of delivery

17
Q

what is an invoice?

A

the document that itemises the goods sent or services specifying the price, it is a legal document and can be used for recording tax so certain items must be specified

18
Q

what is the threshold a company must reach which requires them to pay tax?

A

£85,000

19
Q

what needs to be listed on the invoice? (15)

A

name and address of supplier
address of where the invoice is sent
address of where the goods are sent (if different)
invoice number
VAT registration (if the business is registered for VAT)
customer reference number (if they have one)
original purchase order number which helps link the invoice to the purchase
date of invoice (esp important to credit customers)
product code (if there is one)
precise description of goods and quantity
price for unit and total
discounts (if offered)
rate of VAT
total for the invoice plus the VAT charged

20
Q

what are the three types of discounts?

A

bulk discount
trade discount
prompt payment discount

21
Q

how are discounts calculated?

A

the percentage of the discount is taken off the net price and the VAT is taken off leaving the gross price

22
Q

what is PPD?

A

prompt payment discount which encourages buyers to pay faster for a discount

23
Q

what are the rules surrounding PPD?

A

a set percentage which can be applied within a set amount of time i.e. 2% if paid within 7 days

24
Q

what is the main problem with PPD

A

that the supplier does not know if the discount has been taken unless they have received payment or until the time limit has passed

25
Q

how can the prompt payment discount be given

A

once the invoice has been raised the supplier must record this as well as the discount applied, this can be done two ways, issue a credit note with the discounted amount + VAT or the original invoice must contain clear wording with how much the discount is and when it should be paid by and a statement that the customer can claim back the VAT they paid. If the customer does take the discount the supplier will record the amount paid, the amount of the discount taken, and they must also adjust the VAT

26
Q

how should PPD be calculated off the net amount

A

a prompt payment discount is on top of any bulk or trade discount, so a bulk/trade discount will be shown as a reduction on the invoice and the PPD will be taken off the reduced amount

27
Q

what should be done with faulty goods

A

they should be returned to the seller in a goods returned note and then the seller will will issue a credit note (refund document)

28
Q

why is a credit note important for records

A

to show that the original invoice amount does not need to be paid in full

28
Q

why should you retain the original invoice, even if the credit note means there is no use for it (list two reasons)

A

to show that the original invoice amount does not need to be paid in full, and second both companies would have recorded this invoice so crossing out an entry is not an option

29
Q

how can we calculate the amount to be taken off from the original amount due to faulty goods

A

if two items were to be returned then you would
- calculate the total price before trade discount
2 x 75 (price/item) = 150
- calculate the trade discount
150 x 10%= 15
- calculate net price
150 - 15 = 135
- calculate VAT
135 x 20% = 27
- calculate credit note total
135 + 27 = 162

30
Q

what will a credit note include (list four)

A
  • number of original invoice
  • the reason for return
  • unique number, cn’s have their own sequence of numbers to not have the same details like an invoice.
31
Q

statement of account

A

for a customer it shows all the transactions between customer and supplier, all the invoices, credit notes, discounts and and payments received all shown in one document, this can also be used as a payment

32
Q

the statement may start with b/f, what does this mean

A

for customers that pay their invoices after a period of time so the amount will be ‘brought forward from the previous month, new invoices will be added to this as well as any discounts

33
Q

what is the difference between credits and debits (for the customer)

A

any amounts that decrease what is owed are credits (on the right), and any amounts that increase the amount owed are called debits (on the left)

34
Q

which discounts are listed on statements

A

only PPD’s they are stated once they have been taken and not when they are offered as the customer may not pay within the time allowed to qualify for the discount

35
Q

which documents are included to track sales

A
  • quotes and estimates
  • purchase orders
  • delivery notes
  • invoices
  • return notes
  • credit notes
  • customer statements