Statements of Accounts and Remittance advice Flashcards
What is the purpose of a Statement of Account?
It is a document that intends to make customers pay for their invoices as soon as possible after they have received that document. This is because most customers do not settle their debts after receiving every invoice, as they can purchase from their suppliers multiple times within a month.
What details must be included on a Statement of Account?
Invoices, Credit notes, Payments made, Amounts outstanding from the previous month.
Which details are a debit or a credit on the Statement of Account?
Debit Invoices and amounts outstanding from the previous month, Credit Payments made and Credit notes.
In what order must the Statement of Account be completed in?
In date order (if there were, for example, two invoices on the same date, then order the invoices in sequential invoice number order).
What is the purpose of a Remittance advice?
It is a slip usually attached to the bottom of an invoice that informs the supplier their invoice has been paid.
Why is it vital that you ensure the amount of a cheque received from a customer is correct?
It must agree that the amount on the cheque agrees to the total paid amount on the remittance advice, as well as other details. Any amounts that go over or under the agreed amount means the cheque cannot be accepted.
What other details must you check when agreeing receipts?
Can the cheque be banked i.e. is it signed or valid etc, does the amount paid agree with what is shown as being owed on the customer’s subsidiary sales ledger account, is the payment in time to take any settlement discount offered, has the customer calculated the discount percentage correctly.
If money is going out (credit), what must the amount look like on a Remittance advice?
(Amount in £). This highlights that this is a negative amount.
