Bussins Documents Chpt 25 Flashcards
(12 cards)
What Are the Terms of Sale and Why Are They Important?
TERMS OF SALE
The terms of sale are the conditions attached to a sale, such as who pays for delivery, what discount is available, and when the invoice has to be paid.
What Does ‘Carriage Paid’ Mean in Terms of Delivery?
Delivery If the quotation says ‘Carriage paid’ the seller of goods will cover cost of delivering goods to the buyer.
What Is the Significance of E&OE in Business Transactions?
E&OE This stands for errors and omissions excepted. This means the business will not be held responsible if an error has been made can alter the price in the case that it has.
How Are VAT, CWO, COD, and Payment Terms Related to Business Transactions?
VAT Value Added Tax: This is a tax on goods and services.
CWO (Cash with Order) Payment must be made when the order is placed for goods.
COD(Cash on Delivery) Payment for goods must be made when they are delivered.
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.
What Is a Cash Discount and How Does It Encourage Quick Payment?
Cash discount An extra discount may be given if the goods are paid for in a short period of time. For example, cash discount for 5% for 14 days. Sellers offer this extra incentive to encourage quick payment by buyers.
What Is a Trade Discount and How Is It Applied?
Trade discount This is a reduction of a selling price given to business customers. It is subtracted before the vat is added on.
What Does ‘Price Held’ Mean in a Quotation?
Price held The price quoted might be valid only for a limited time.
What Is an Invoice and What Information Does It Include?
Invoice 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. The invoice acts as the final bill for the goods delivered.
Why Would a Seller Issue a Credit Note or a Debit Note?
Credit note A credit note is a document that is sent by the seller to the buyer to decrease the amount owed. 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.
Debit note A debit note is sent by the seller to the buyer and will increase the amount owed. It is used when there has been an undercharge on an account.
What Is Effective Purchasing and How Does It Benefit a Business?
Effective purchasing is about buying the right goods, at the right time, at the right price, in the right quantity and of the right quality. An efficient business must engage in stock control to ensure they do not have too much or too little stock.
When deciding on the right level of stock to keep; a business must consider:
• Storage: does the business have enough space?
• Costs: the greater the amount of stock carried, the higher the insurance costs will be.
• Customer Demand: A business may have to stock up on extra products
• Lead Time: how long does it take for an order to be delivered from the supplier?
• Type of Stock: if stock will go off quickly a limited amount should be carried.
What Is a Statement of Account and What Does It Include?
Statement of Account A statement of account is sent by the seller to the buyer. It 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 demand for whatever payment is still owed.
The method used in the statement of account is known as the continuous balancing method.
What Steps Should Be Taken When Dealing with Documents in Business?
DEALING WITH DOCUMENTS
> Check details & prices
• File original or copy for reference
> Check name and address of Seller/Buyer
> Check Terms of Sale
• Check calculations
• Record details in relevant accounts
