BUSINESS DOCUMENTS Stages of Financial Recording Letter of

BUSINESS DOCUMENTS

Stages of Financial Recording Letter of enquiry, quotations, orders, delivery documents, invoice, credit note, statement, cheque, receipt Sales book, sales returns book, purchases returns book, cash book, general journal Post to General Ledger, Debtors Ledger, Creditors Ledger Balance ledger accounts and extract a Trial Balance Prepare Final Accounts and Balance Sheet Calculate Net Profit and Capital Employed

Business Documents Sequence Letter of Enquiry from the Buyer Quotation sent by Seller Order is placed by the Buyer Delivery Docket signed for Seller Invoice sent by the Seller Letter of Complaint by Buyer Statement sent by Seller Cheque paid by buyer and Receipt issued by Seller Credit note issued by Seller

Letter of Enquiry Finding out information about the products and services available, prices of goods and delivery options Treatment of Letter of Enquiry Buyer Seller - Check name and address - Check the name and are correct address - File a copy of the letter of - Send a quotation enquiry - File the letter

Quotation It is sent based on the letter of enquiry giving information of the goods available, price and any discounts and delivery options Treatment of Quotation Buyer Seller - Compare all the quotations for the best deal - File the quotation - Check name and address are accurate - File a copy of the quotation sent

Order Based on the best quotation, the buyer places an Order with the seller to send the goods and the terms outlined in the Quotation Treatment of Order Buyer Seller - Check the name and address - File a copy of the Order placed - Check the name and address against the quotation - Check the stock levels and credit rating - File the Order

Delivery Docket This document provides proof that the goods were delivered and have them checked before signing the docket Treatment of Delivery Docket Buyer Seller - Check the name and address - Check that they are the correct goods ordered - File a the delivery docket - Check the name and address - Check the details according to the order - File a copy of the delivery docket

Invoice Sent by the Seller outlining the quantity, description and price of the goods and any discount which has been offered. Treatment of Invoice Buyer Seller - Check the name and address are correct - Check that they are the correct goods as per order - Check the calculations - File the invoice - Check the name and address - Check the details are correct - Check the calculations - File a copy

Letter of Complaint This is only sent if the goods ordered are incorrect or damaged and buyer is seeking a replacement or discount. Treatment of Letter of Complaint Buyer Seller - Check the name and address - Check the details are correct as per order and invoice - Identify the problem - File a copy - Check the name and address - Check the details as per order and invoice - Investigate the problem with the goods delivered - File the letter of complaint

Credit Note Offered by the seller to the buyer an alternative to cash so the buyer can order different goods at a reduced price. Treatment of Credit Note Buyer Seller - Check the name and address - Check the details with the letter of complaint - Check the calculations - File a copy of the credit - File the credit note

Statement of Account The seller issues this to the buyer at the end of the month outlining the transactions that have taken place and the money owed. Treatment of Statement of Account Buyer Seller - Check the name and address - Check the calculations - File the statement - Check the name and address - Check the calculations - File a copy of the statement of account

Cheque Payment made by the buyer to the seller for goods purchased on the amount owing. Treatment of Cheque Buyer Seller - Complete the cheque correctly and counterfoil - Check the name and amount is correct - Check the details are correct on the cheque

Receipt A receipt is proof of purchase by the buyer and that the goods were paid for. Treatment of Receipt Buyer Seller - Check the details are correct on the receipt - File the receipt - Complete the receipt - Check the name and the amount is correct

Mark – up Formula Profit x 100% Cost Price 1 An item costing € 40 is sold for € 55. Calculate the mark-up? € 15 x 100 % € 40 1 = 37. 5%

Margin Formula Profit x 100 % Selling Price 1 Cost price € 40 and the selling price is € 50. Calculate the profit margin. € 10 x 100 % € 50 1 = 20%

Exam Question (2010 P 2 Q 2)