Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

AAT UNIT 1 | Chapter One > Business Documents For A Credit Transactiom > Flashcards

Business Documents For A Credit Transactiom Flashcards

(76 cards)

Start Studying
1
Q

What should a quote have in the top left corner?

A

Name, address and contact details of a business quoting price

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

How should a quote be finished?

A

With an authorised signature

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

Why should a quote include regarding the goods?

A

Details of the goods as well as price being quoted

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

What is the quote important?

A

Because this is the price at which your organisation is now contracted to sell the goods.

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

Do quotes have to be authorised by an appropriate person in the organisation?

A

Yes

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

What is a discount?

A

A discount is a reduction in the price of the sales of goods or services

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

What are the different types of discounts?

A

Trade discount, bulk discount, prompt payment discount

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

What is the intention of a trade discount?

A

Encouraging and rewarding customer loyalty

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

How will trade discount appear on an invoice?

A

It will be deducted from the list price of goods before VAT is calculated.

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

Who gives a bulk discount?

A

It is given by the supplier for sales orders above a certain quantity

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

How must a bulk discount be checked?

A

To ensure the correct amount has been deducted

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

What is prompt payment discount also known as?

A

Settlement or cash discounts

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

Why are prompt payments offered?

A

To encourage early payment of invoice

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

Where are the details of a pro opt payment discount usually shown?

A

At the bottom of an invoice

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

What is a purchase order?

A

A buyer generated document that authorises a purchase transaction

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

How can an order be made?

A

Via a website, telephone, email or in writing.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What can you check in a purchase order?

A

Does the price match the quote
Are delivery terms acceptable
Are any discounts applicable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What is at the top of a purchase order?

A

Name and address of business placing the order

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What is important to be included on a purchase order?

A

An order date, sequential order number, VAT registration number of the business placing the order

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What is a sales order?

A

A seller generated document that authorises a sale to a customer issued after the receipt of a purchase order

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What does a sales order confirm?

A

The terms on which goods will be sold including:
Quantity/types of goods or service
Date of supply and delivery address
Price and payment terms including any discounts given or offered

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What happens when negotiations over the price and terms of the credit sale have been completed?

A

The goods will be delivered

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What is a delivery note?

A

A document accompanying foods despatched to a customer explaining what the delivery contains.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

How many parts to a delivery note?

A

3

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
What is a goods received note?
This is an internal document completed by the purchaser that records the details of good ps received and contains similar information to a delivery note
26
What is the goods received note often compared to?
The purchase order as part of a pay,ent authorisation process
27
A goods received note contains:
Supplier name Quantity / type of goods or service The associated purchase order reference and delivery note number The name and reference of the carrier for delivery
28
What is the definition of a sales invoice?
A document that itemises a transaction between a buyer and a seller. It is a request for the buyer to make payment for goods sold or services provided by seller
29
When the goods have been delivered, what happens?
The seller must prepare and send out the sales invoice
30
How would a sales invoice be prepared in a manual system?
Details shown on a delivery note. Price, discounts, and VAT are shown on the sales invoice, with a VAT number if applicable
31
Do sales orders have preprinted sequential numbers?
Yes
32
How is the sales order produced in a computriser system?
It would normally be produced at the same time as the delivery note and will be identical, except the delivery note will not have details of price and will usually be a different colour
33
Where are unit prices for goods or services kept?
In master files, which must be updated regularly
34
Do prices on quotes include VAT?
Normally, no
35
What is the definition of VAT?
A consumption tax added to the products selling price.
36
What is VAT charged on?
The taxable supply of goods and services in the UK by a taxable person in the course of a business carried on by that person
37
What is output tax?
The tax charged on the sale of goods and services
38
What is input tax?
The tax paid on the purchase of goods and services
39
What is taxable supply?
The supply of all items except those which are exempt
40
Explains of exempt items?
Certain land and buildings Insurance Post office charges Betting, gaming
41
Can income tax be reclaimed where the traders supplies are all exempt?
No
42
How many rates of VAT on taxable supplies are there?
Three
43
Define zero rated tax
Similar to exempt, except that input tax can be reclaimed
44
What is the special rate for domestic fuel and power?
5%
45
Example of zero rated items?
Water, and most types of food (not cafe/restaurant or hot food as a service is also provided. Books and newspaper Drugs and medicines Children’s clothing and footwear
46
What is non-deductible tax?
Vat on purchases of these items can never be deducted, the business has to bear the VAT as an expense.
47
Example of non-deductible items?
Motor cars, business entertaining
48
What is a taxable person?
Any individual, partnership, company etc, who intends to make taxable supplies and is liable to register.
49
When is a person liable to register?
If the value of taxable supplies exceeds a specified amount in 12 month period
50
Define NET
A net amount excluded VAT
51
How to work VAT from the NET amount?
Add 20% … NET X 20 = ? X 100
52
Define gross amount
A gross amount includes VAT
53
How to work out VAT from the gross amount?
Divide the gross amount by 6
54
When is VAT calculated?
After trae De and bulk discounts have been deducted from the original list price
55
What happens to the VAT amount when a customer takes advantage of the prompt payment discount?
The VAT amount is adjusted
56
What do you need to prepare an invoice?
The customer master file, showing any discount given or offered to the customer
57
Define purchase order
An invoice is a document that itemises a transaction between a buyer and a seller
58
What happens when a customer receives their purchase invoice from the seller?
A number of checks need to be made before it can be passed for payment
59
What must the purchase invoice received be agreed to?
The purchase order, the delivery note, and goods received note
60
It is important to check the description and the quantity of the goods per invoice against…?
The purchase order and delivery note
61
What calculations on an invoice should be checked?
All pricing calculations, trade discount, vat calculations, total additional of the invoice
62
What are four common terms and conditions shown on invoices?
E&OE Carriage paid Ex works Cash on delivery
63
What does E&OE mean on an invoice?
Errors and omissions excepted… selling is claiming to right to correct errors on the invoice at a later date.
64
What does carriage paid on invoice mean?
The invoice value includes delivery of the goods to the customers premises
65
What does ex works on an invoice mean?
Prices quoted do not include delivery
66
What does cash on delivery mean on an invoice
The customer is expected to pay for the goods when they are delivered
67
Define credit note
Document issued by. A supplier to a customer cancelling part or all of the sales invoices
68
When would a business issue a credit note?
When a customer returns faulty or damaged goods Make a refund for short deliveries Settle a dispute Adjust an account after taking advantage of a prompt payment
69
Why is a credit note issued?
Document evidence that goods have been returned and that or or some of the previous invoice has been cancelled.
70
What is the return of goods often accompanied by?
A goods returned note
71
Define goods returned note?
Document sent to the supplier by the customer detailing the goods returned and reasons for the return being made
72
What are the content of the goods returned note similar to?
A goods received note, but with the added detail on why the return is being madr
73
What happens when the supplier receives returned goods?
They must be inspected, counter and recorded on receipt.
74
Who should authorise a credit note?
A supervisor
75
When doesn’t a credit note need an inwards note?
An error may have been made in pricing on an invoice but the customer is satisfied with the goods and does not want them returned
76
What detail does a credit note include?
All the details that would normally appear on a sales invoice

AAT UNIT 1 | Chapter One (4 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions