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    Accounting 0452 Notes-Ch6

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    Huma Peeran
    This document describes several common business documents used in accounting: invoices, debit notes, credit notes, statements of account, cheques, and receipts. Invoices are issued by suppliers to customers and record details of goods supplied on credit. Debit notes and credit notes are used to request price reductions on invoices or notify customers of reductions. Statements of account summarize monthly transactions. Cheques are written orders to banks to pay money, and receipts acknowledge cash payments.

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    Accounting 0452 Notes-Ch6

    Uploaded by

    Huma Peeran
    47 views2 pages
    This document describes several common business documents used in accounting: invoices, debit notes, credit notes, statements of account, cheques, and receipts. Invoices are issued by suppliers to customers and record details of goods supplied on credit. Debit notes and credit notes are used to request price reductions on invoices or notify customers of reductions. Statements of account summarize monthly transactions. Cheques are written orders to banks to pay money, and receipts acknowledge cash payments.

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    Accounting 0452 notes-ch6

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    This document describes several common business documents used in accounting: invoices, debit notes, credit notes, statements of account, cheques, and receipts. Invoices are issued by suppliers to customers and record details of goods supplied on credit. Debit notes and credit notes are used to request price reductions on invoices or notify customers of reductions. Statements of account summarize monthly transactions. Cheques are written orders to banks to pay money, and receipts acknowledge cash payments.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    47 views2 pages

    Accounting 0452 Notes-Ch6

    Uploaded by

    Huma Peeran
    This document describes several common business documents used in accounting: invoices, debit notes, credit notes, statements of account, cheques, and receipts. Invoices are issued by suppliers to customers and record details of goods supplied on credit. Debit notes and credit notes are used to request price reductions on invoices or notify customers of reductions. Statements of account summarize monthly transactions. Cheques are written orders to banks to pay money, and receipts acknowledge cash payments.

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    Cambridge IGCSE Accounting

    ACCOUNTING NOTES
    Chapters 6 – Business Documents

    All accounting entries in a business are made using documents that are issued or
    received by the business.
    The main business documents that are used and followed are described below.
    Invoice: an invoice is a document issued by the supplier of goods on credit showing
    details, quantities and prices of goods supplied. This is issued from the supplier to
    the purchaser.
    Sometimes the supplier may provide the purchaser trade discount. This is shown as
    a deduction on the invoice. Usually the rate of discount will increase according to
    the quantity purchased, encouraging customers to buy in bulk.
    The customer (purchaser) will use the original invoice to record the purchase of
    goods on credit. The supplier keeps a copy of the invoice and uses it to record the
    sales of goods on credit.

    Debit Note: is a document issued by a purchaser of goods on credit to request a


    reduction in the invoice received. A debit note is used to inform the supplier of any
    shortages, overcharges and faults in the goods.
    Debit notes are never entered in the accounting records. Neither the supplier nor
    the customer will make any entries in their accounting records. A debit note is just
    a request to the supplier to reduce the total of the original invoice or to send a
    replacement of the goods.
    If there is a price mentioned on the debit note then this is usually the price that the
    purchaser paid after any trade discount.

    Credit Note: is a document issued by a seller of goods on credit to notify of a


    reduction in an invoice previously issued. When goods are returned, reported faulty,
    or where there has been an overcharge on an invoice, the supplier will issue a credit
    note.
    To distinguish them from invoices, credit notes are sometimes printed in red.
    Page 1|2
    Cambridge IGCSE Accounting

    The customer receives the original credit note and uses it to record the purchases
    returns. The supplier keeps a copy of the credit note and uses it to record the sales
    returns.

    Statement of Account: is a document issued by the seller of goods on credit to


    summarize the transactions for the month. At the end of each month, a supplier will
    usually issue each customer with a statement of account. This is a summary of
    transactions for the month.
    A statement of account is never entered in the accounting records. Neither the
    supplier not the customer makes any entries in their accounting records in respect
    of a statement of account. This is just a reminder to the customer if the outstanding
    amount. This can be checked against the customer’s own records.

    Cheque: is a written order to a bank to pay a stated sum of money to the person or
    business named on the order. Many accounts are paid by means of a cheque. A book
    of preprinted cheques is issued by the bank, and the customer is only required to
    complete the necessary details of date, amount and payee (the person or business to
    whom the money is being paid).
    The supplier receives the cheque. A paying-slip is completed when the cheque is paid
    into the bank. The counterfoil of this paying-slip is used to make the entry in the cash
    book to show the money paid into the bank and to make note of the discount in the
    discount allowed column.
    The customer keeps the cheque counterfoil and uses it to make the entry in the cash
    book to show the money paid out of the bank and to make a note of the discount in
    the discount received column.

    Receipt: is a written acknowledgement of money received and acts as a proof of


    payment.
    Since a cheque passes through the banking system it can act as a receipt, so many
    businesses do not issue receipts if account have been paid by cheque.
    Where goods are sold for cash, the customer is usually provided with a receipt.

    Page 2|2

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