New Concepts Gr 9 Flashcards
(14 cards)
Define cash purchases
Transactions where the business buys goods for resale and pays immediately.
Define credit
When goods are bought and sold on a specific date and will be paid for at a later date.
Define liabilities
Amount of money the business owes to an outside party/business.
Long term liabilities = loans
Current liabilities = creditors or blank overdraft
Define credit purchases
When a business buys goods for resale, receives them and only pay at a later stage. The business buys on credit from a supplier called creditor. If not paid on time the creditor will charge interest called interest paid.
Define trade discount
Is a reduction on the price of goods that is given by the supplier when large quantities are purchased on bulk. Never shown in the books of the business - the business records the amount after the deduction was made.
Define invoice
Source document for credit transaction. It is a detailed document received when buying or selling goods on credit
Define E and OE
Means errors and omissions excluded. This means that if the business who issued the invoice has made a mistake on it then they have the right to correct it.
Define what statement of account is
All the information relating to the months transactions can be found on statement of account. It’s a copy of the business’ account in the creditors book. Acts as a reminder that the business owes money to a creditor.
Define cash sales
Transactions where the business receives money for the sale of goods immediately
Define a debtor
A customer who owes money to the business
What are assets
Possessions owned by the business which has a monetary value
Define credit sales
When a business will receive the money for the sale of goods at the later stage. The business sells on credit to a customer called a debtor. If debtors do not pay their accounts on time, the business will charge interest, interest received
Define cash discount
Is given to a customer if their account is paid within a time limit stated by a seller. To encourage customers who buy on credit to pay the amount within the given time period. It is shown in the books of the business
What is the difference between discount allowed and discount received?
Discount allowed is a reduction given to customers (debtors) and it is a expense for the business whereas discount received is a reduction given to the business by a supplier (creditor) and it a income for the business.
