Unit 1 Business Transactions Flashcards
(9 cards)
What is quotation
It is common practice to quote prices on a website if there is a standard price list from which there are no variations. However, some businesses will be prepared to offer certain customers goods at different prices or offer a discount. Therefore it is often a price Quotation is sent out showing the customer how much the supplier will sell the desired goods for
What is a purchase order
An order may be by via website,telephone,email or it , may be in writing. It it’s important to check all details carefully.
Does the price agree to what was quoted to the customer?
Are the delivery terms acceptable?
Are any discounts applicable?
Once the customer is happy with the quotation, they will place an order with the business using a purchase order. It is important to ensure the details from the original quotation and purchase order are the same.
Once the supplier has received the purchase order, a sales order can be sent to the customer for confirmation
What is a sales order
A seller generated document that authorises a sale to a customer, issued after the receipt of a purchase order
A sales order confirms 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 discount given or offered
What is the delivery note
A document accompanying goods despatched to a customer explaining what the delivery contains
The delivery note is usually in 3 parts
Part 1 is kept by the customer in order to compare to the purchase order and then the sales invoice
Part 2 is signed by the customer then returned to the supplier of the goods as evidence that the goods have been received by the customer in good condition
Part 3 is kept by the courier who has delivered the goods. As evidence that they have delivered the goods and that the customer has received them
What is the Goods received note
The goods received note is often compared to the purchase order as part of a payment authorisation process. The information that a goods received note contains:
Suppliers 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 ( if different from supplier name)
what is a trade discount
a trade discount is a definite amount that is deducted from the list price of the goods for the supplies to come customers, with the intention of encouraging and rewarding customer loyalty
it will appear on the invoice. it will be deducted from the list price of the goods before VATis calculated
the calculation of trade discount on the face of the invoice should be checked and it should be agreed that the correct percentage of trade discount has been deducted
what is a bulk discount
a bulk discount is given by suppliers for a sales order above a certain quantity
A bulk discount must be checked to the agreement between customer and supplier, to ensure that the correct discount has been deducted.
The deduction of a bulk discount will appear on the invoice, deducted from the list price before VAT is calculate
what is a prompt payment discount
prompt payment discounts (also known as settlement or cash discounts) are offered to customers in order to encourage early payments of invoices.
The details of the prompt payment discount are normally shown at the bottom of an invoice. It is up to the customer to decide whether to pay the invoice early to benefit from the prompt payment discount. No deduction will be made on the invoice for a prompt payment discount
