2.2 Business documents
Recognize and Understand Business Documents
1. Invoice
An invoice is a document issued by a seller to a buyer, detailing the goods or services provided, their quantities, prices, and terms of sale.
Example:
Invoice
Date: 1st July 2024
To: ABC Business
Item Quantity Price per Unit Total
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Product A 10 $50 $500
Product B 5 $100 $500
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Total: $1000
2. Debit Note
A debit note is issued by a seller to notify the buyer of an increase in the amount owed due to reasons such as additional goods sent or a price adjustment.
Example:
Debit Note
Date: 5th July 2024
To: XYZ Ltd
For additional 5 units of Product A
Price per Unit: $50
Amount: $250
3. Credit Note
A credit note is issued by a seller to reduce the amount owed by the buyer, typically due to returns, discounts, or errors in the original invoice.
Example:
Credit Note
Date: 10th July 2024
To: ABC Ltd
For return of 3 units of Product B
Price per Unit: $100
Amount: $300
4. Statement of Account
A statement of account summarizes transactions, payments, and outstanding balances between a buyer and seller over a specific period.
Example:
John Shop # 105 Central Shopping MallStatement of Account
Period: January-June 2024
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Date Description Debit Credit
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1-Jan-24 Invoice #001 $1000
15-Feb-24 Payment $500
10-Mar-24 Invoice #002 $800
30-Apr-24 Credit Note #001 $200
------------------------------------------------------
Balance: $1100
5. Cheque
A cheque is a written order directing a bank to pay a specified sum from the drawer's account to the payee.
Example:
Cheque
Date: 15th July 2024
Pay to the order of: ABC Suppliers
Amount: $1000
6. Receipt
A receipt is issued by a seller upon receiving payment from a buyer, confirming the transaction details.
Example:
Receipt
Date: 20th July 2024
Received from: XYZ Ltd
Payment for: Invoice #002
Amount: $800
Complete Pro-forma Business Documents
Pro-forma documents are draft versions of invoices, purchase orders, etc., used for estimation or informational purposes. They contain all necessary details but are not legally binding.
Use of Business Documents as Sources of Information
- Invoice: Provides details of goods or services sold, quantities, prices, and terms.
- Credit Note: Indicates adjustments for returns, discounts, or errors in invoices.
- Cheque Counterfoil: Records details of cheques issued, including date, payee, and amount.
- Paying-in Slip: Lists cash and cheques deposited into a bank account.
- Receipt: Acknowledges receipt of payment from a customer.
- Bank Statement: Summarizes all transactions within a specified period, showing deposits, withdrawals, and balances.
These documents serve as crucial sources of information for financial recording, reconciliation, and decision-making within a business.
