JUNIOR CERT BUSINESS PAPER 2 DOCUMENTS (Higher) 1
DEFINITE QUESTION EVERY YEAR! USUALLY QUESTION 2! Short questions with Documents 2012 Mark-Up Delivery Docket Processing Delivery Dockets Credit Note Sales Returns Book SQ Q.18 2011 Effective Purchasing Processing s Receipt Sales Book & Analysed Cash Book 2010 Credit Rating Processing Statements Statement Receipt Analysed Cash Book SQ Q.10 2009 Quotation Processing quotation Order Form Credit Note Sales Returns Book SQ Q.9 2008 Enquiry Mark-Up Processing Receipts Receipt Sales Book & Analysed Cash Book 2007 VAT & Trade Discount Processing Quotations Effective Purchasing Complaints Credit Note Sales Returns Book SQ Q.17 & Q.18 2006 Selling goods on credit Credit Rating Processing statements Statement Receipt Purchases Returns Book SQ Q.13 ORDINARY LEVEL 2012 Cheque Receipt 2011 Order Bank Account 2010 Order Delivery Docket Cheque Q.15 Receipt 2009 Cheque Bank Account 2
As in any business deal, there are 2 parties the buyer and the seller. Throughout the course of any business dealings, many documents pass between both parties. The information in these documents is used as information to write up day books and so are called source documents. There is normally one person responsible in every company for purchasing and that is the Purchasing Manager. To do their job properly, they must be effective in their purchasing. Effective purchasing involves buying the right quantity and quality at the right time and price. In order to keep track of transactions, a business will issue these documents which are a written record of what happened and are filed for future reference. There are 8 main documents: 1. Letter of enquiry 2. Quotation 3. Order 4. Delivery Docket 5. 6. Credit Note 7. Statement 8. Receipt 1. LETTER OF ENQUIRY Nowadays, enquiries are normally done by email because of the speed of the response. However, enquiries can also be made by: Letter 3
Phone call Call into the shop in person Fax Text Message (Not used much) Information about products can also be found: On websites Classifieds in the newspaper Advertisements such as TV ads and billboards Trade associations Other businesses Your address Their address Date Greeting 2. QUOTATION 4
TERMS OF SALE 1. Carriage paid Seller will pay to deliver the goods 2. CWO Cash With Order means payments must be made when ordering the goods. Buying from websites is an example. 3. COD Cash On Delivery means payment must be made when the goods are delivered. 4. Cash Discount Given to customers who pay promptly within the written period of time. In this example, the buyer will get a discount of 5% if they pay within 10 days of receiving the goods. 5. Trade Discount Reduction in the selling price for people in the same line of business e.g. car manufacturing company would get a discount from a tyre company and vice versa. 6. VAT - Value Added Tax is a tax on consumer spending. A tax is placed on each good and service at each stage of the channel of distribution so that the government doesn t have to wait for the item to be sold. E & OE Errors and Omissions Excepted Means that the person issuing the quotation, statement or invoice is clear from blame if there is a mistake on it. To resolve this, a new quotation, statement or invoice is issued. 3. ORDER Goods can be ordered by any means but it is better to have it in writing. 5
CHECK STOCK It is now necessary for the supplier to check if the goods the customer wants are in stock. It is very important for businesses to have the correct level of stock. A good stock control system involves: Having the correct level of stock Stock in good condition Prevent wastage and theft Accurate records of sales and purchases Regular stocktaking Good storage facilities Computerised reordering system CHECK CREDIT RATING When a business sells good on credit, buyers become debtors. Important that these debtors do not become bad debtors (cant repay what they owe). To prevent this, sellers carry out credit checks on the customer. It can do this in 3 ways: 1. Contact Irish Credit Bureau 2. Ask for a bank reference (to see if they have paid back loans) 3. Ask for a trade reference (to see if they have paid back previous bills) 4. DELIVERY DOCKET Issued by seller and lists the goods being delivered. 6
Must be signed 5. INVOICE An invoice is the document sent from the seller to the buyer and has the following information: No. Order No. Customer No. Date order processed 7
Quantity of goods Description of goods Price per unit and total price Terms of trade including discounts Carriage details and terms VAT details E &OE (Errors & Omissions Expected) Discount is subtracted VAT is added The invoice is the source document for the sellers sales book and the buyer s purchases book. 8
6. CREDIT NOTE The invoice is the source document for the seller s sales returns book and the buyer s purchases returns book. It shows a reduction in the amount owed by the buyer. A credit note is sent: If the buyer has been overcharged If some of the goods were not delivered If some of the goods were damaged If some of the goods didn t match what was ordered Discount is subtracted VAT is added 9
7. STATEMENT The statement is sent by the supplier and gives a summary of transactions that have occurred within a particular period. It shows the opening balance (money owed at the start of the period) s Cheques Credit Notes C for CREDIT, C for CHEQUE, C for CREDIT NOTE 10
8. RECEIPT Written acknowledgement of payment which is signed by the seller and given to the buyer. IF ASKED HOW TO PROCESS DOCUMENTS... CHECK, COMPARE & FILE CHECK Prices Quantity Model Numbers Name & Address of supplier Discounts Etc COMPARE AGAINST Previous document e.g. compare the order with the quote, compare the delivery dockets with the order, compare the statement with the invoices and credit notes, etc FILE IT...for future reference. 11