Business Documents | O Level Accounting 7707 & IGCSE Accounting 0452 | Detailed Free Notes To Score An A Star (A*)

Business Documents

• Different business documents are used in every business.
• The setting of each
  • Quotation
    • Seller sends to buyer.
    • Details sent to potential buyer about the possible supplies, their time, date, unit price and where they have to be supplied.
  • Purchase order
    • Buyer sends to seller
    • Buyer tells that it wants to buy a good and/ or service
    • Contains the name of the seller, the order date, details of ordered goods and required delivery date.
  • Advice Note
    • Seller sends to buyer
    • It tells that buyer that the purchase order is about to be dispatched
    • Sent before purchase order is dispatched.
  • Delivery note
    • Seller sends to buyer
    • Buyer uses it to check if the correct gives are received, and return a signed copy to the transporter
    • Contains buyer address, name, goods dispatched details and quantities, delivery address, date and signature by the buyer upon receipt
  • Invoice
    • Seller sends to buyer
    • The transaction becomes legal
    • It shows the details of the products sold and the amounts due for them
    • It shows the date of payment that is expected
    • It may show cash discount terms too.
    • Contains the seller and buyer’s names and addresses, the date of the invoice and the date of the delivery, description of the products and any trade discount given, total owed amount, and terms and conditions of cash discounts.
  • Debit Note
    • Buyer sends to seller
    • It is for purchase returns by the buyer to the seller
    • The seller uses it to check if the goods are received and are actually faulty.
    • Basically, the seller is a accounts payable in the buyers book – the debit note shows that the buyer will debit them, which means a liability being debited in their books – which means a liability is being reduced.
    • Goods may be damaged, broken or not per the required order.
  • Credit note
    • Once the seller confirms that the returned goods are faulty.
    • Seller sends to buyer
    • Buyer uses it to record Purchase return
    • Seller uses it to record sales return
    • As the buyer is accounts receivable in the seller’s books, he will reduce the accounts receivable – an asset, as sales returns has happened. Reducing an account means crediting – hence the name credit note.
    • Confirms that the amount will be deducted from the statement
  • Statement of Account
    • At the end of the month usually
    • Seller sends to buyer
    • Showing the transactions that have occurred and the remaining amount
    • Buyer checks and confirms if everything is correct.
  • Remittance advice of payment
    • Buyer sends to seller
    • With payment of goods
    • After the cheque has been given for the payment
  • Receipt
    • Seller confirms the receipt of the payment
    • Buyer now credits his cash in the cash book.
    • Once the cheque is received.