Business Documents - Chapter 18

Question 1

What is the importance of business documents?

Answer 1

Business documents provide a record of a business’ transactions with other businesses and customers.

Question 2

What is a creditor?

Answer 2

A creditor is a person or business to whom a business or individual owes money.

Question 3

What is a quotation?

Answer 3

A quotation is a written document that is sent by a seller to a potential buyer and shows the price of the goods and any terms of sale.

Question 4

What is a letter of enquiry?

Answer 4

A letter (or email) of enquiry is sent by the buyer to the seller asking about particular items and their terms of sale.

Question 5

What are terms of sale?

Answer 5

Terms of sale are the conditions attached to the sale of a product.

Question 6

What does delivery mean?

Answer 6

Delivery: If the quotation says ‘Carriage paid; the seller of the goods will cover the cost of delivering the goods to the buyer. Otherwise, they will give a cost for postage or a courier.

Question 7

What does Errors and Omission Excepted (E&OE) mean?

Answer 7

E&OE: This stands for errors and omissions excepted. This means that the business will not be held responsible if an error has been made and can alter the price in the case that it has.

Question 8

What does price held?

Answer 8

Price held: The prices quoted might be valid for only a limited time. This encourages the customer to order quickly.

Question 9

What does trade discount mean?

Answer 9

Trade discount: This is a reduction of the selling price given to business customers. It is subtracted before the VAT is added on.

Question 10

What does cash discount mean?

Answer 10

Cash discount: An extra discount may be given if the goods are paid for in a short period of time.

Question 11

What does Valued Added Tax (VAT) mean?

Answer 11

VAT: This is a tax on goods and services. It must be charged on each transaction in the channel of distribution.

Question 12

What does cash with order (CWO) mean?

Answer 12

CWO (cash with order): Payment must be made when the order is placed for the goods.

Question 13

What does cash on delivery (COD) mean?

Answer 13

COD (cash on delivery): Payment for the goods must be made when they are delivered.

Question 14

What does payment terms mean?

Answer 14

Payment terms: This is where details of the credit and payment terms are given, e.g. a buyer may have up to thirty days to pay for the goods.

Question 15

What is the order?

Answer 15

An order is a written document sent by a buyer to a seller requesting the supply of the quantity of goods listed.

Question 16

What is the invoice?

Answer 16

The invoice is a document sent by the seller to the buyer with the goods or shortly after the delivery of them. It gives details of the quantity, price of the goods being sent, terms of sale and details about carriage.

Question 17

What is the delivery note?

Answer 17

The delivery note is a document sent by the seller to the buyer that lists the items being delivered.

Question 18

What is the credit note?

Answer 18

A credit note is a document that is sent by the seller to the buyer to decrease the amount owed by them. It is issued when goods that have been purchased on credit are returned to the seller and it would not be appropriate to provide a cash refund.

Question 19

What is the debit note?

Answer 19

A debit note is sent by the seller to the buyer and will increase the amount owed by them. It is used when there has been an undercharge on an account.

Question 20

What is the statement of account?

Answer 20

A statement of account is sent by the seller to the buyer and is a summary of all the transactions between the two firms over a particular period of time. It shows the full amount owed and will act as a request for any payment still owed at the end of the month.

Question 21

What is the receipt?

Answer 21

A receipt is a written document stating that the goods have been paid for. It is signed by the seller and given to the buyer.