Business Documents

• recognise and understand the following business documents: invoice, debit note, credit note, statement of account,
cheque, receipt 


• complete pro-forma business documents 


• understand the use of business documents as sources of information: invoice, credit note, cheque 

counterfoil, paying-in slip, receipt, bank statement. 

Business Documents

• Invoice
• Debit Note
• Credit Note
• Statement of Account
• Cheque
• Receipt
The sequence of documents
Supplier Customer

Seller makes out invoice listing goods, price, discounts

Buyer issues debit note for goods returned

Seller confirms the goods by releasing credit note

At the end of the month, seller sends out statement of

account as a summary of the transactions for the month.

Buyer settles his/ her debt with cheque.

Seller publishes receipt recognising cash payment

received.
The invoice – Aim

• Issued for credit sales

• Purchases Invoice for customer
• Sales Invoice for supplier
The invoice – Recording

• Customer keeps the invoice to record as credit

purchases in his purchases journal.
• Supplier keeps the copy to record as credit sales in
his sales journal.
The invoice – details

• Seller’s name and address

• Buyer’s name and address
• Date
• Description of goods or service supplied, including
price and quantity
The invoice – Trade Discount and Cash Discount

Trade Discount Cash Discount

• Given to business at the • Given for paying debts
same trade for buying promptly.
in bulk. • Deduction of remaining
• Deduction of list price amount owed
• No account to record • Part of income or
expenses
The invoice
Invoice
No. I 3624
INVOICE

The Weaving Shed

14 Industrial Street
Hightown
Telephone 111 01357

Sew and Sew

92 The Avenue
Low Town 3 April 2009

Quantity Description Unit Price Amount

$ $
30 metres Brocade fabric Design: B320 Colour: Crimson 15 450 00
10 metres Polycotton fabric Design: P21 Colour: Lemon 6 60 00
510 00
Less: 20% Trade Discount 102 00
408 00
Terms: 2 1/2 % cash discount if account paid by
31 May 2009
The Debit Note and Credit Note — Details

• Seller’s name and address

• Buyer’s name and address
• Date
• Clear description of goods or services returned or
overcharged, including price, quantity, and total
value.
• Trade discount should be included if any
Debit note – Aim

Only issued by the customer to the supplier

when there is a problem eg

• Goods damaged
• Incorrect goods delivered – and returned
• Fewer goods delivered than charged on invoice
• Overcharge on invoice
The Debit Note — Recording

• Neither business records.

Debit Note
Debit Note
Number 29
DEBIT NOTE

Sew and Sew

92 The Avenue
Lowtown

The Weaving Shed

14 Industrial Street
Hightown 6-Apr-09

The following goods have been returned:

Price Amount
$ $
10 metres Polycotton Fabric Design P21 Colour Lemon 6 60 00

Less 20 % Trade Discount 12 00

48 00
Reason for return - Wrong Colour Supplied

Please issue a Credit Note

Credit note – aim

Only issued by the supplier to the customer to

confirm the goods returned or overcharged and
informed the allowance given.
Credit note – Recording

• The supplier keeps the copy and use it to

record in sales returns journal.
• The customer receives the original and use it
to record in purchases returns journal.
Credit note
Credit Note
C 529
CREDIT NOTE

The Weaving Shed

14 Industrial Street
Hightown
Telephone 111 01357

Sew and Sew

92 The Avenue
Lowtown 9-Apr-09

Quantity Description Unit Price Amount

$
10 metres Polycotton fabric Design: P21 Colour: Lemon 6 60 00

Less: 20% Trade Discount 12 00

48 00
Reason for issue of credit note:
Wrong colour supplied
 Weaving Shed
Sales Returns $ 48

Trade Receivables - Sew & Sew $ 48

Sew & Sew
Trade Payables - Weaving Shed $ 48
Purchases returns $ 48
Statement of Account – Aim

• A summary of a customer’s account activity

in a period (usually a month).
• To remind the customer amount due.
Statement of Account – Recording

• No entries made by each business, unless

there is a correction of error.
 Statement of account – Details

• supplier’s name and address

• customer’s name and address
• date (usually at the end of the month)
• opening balance, amount owing at the starting period
• invoices and credit notes issued
• cash discounts allowed (if any)
• payments received
• closing balance
Statement of account
STATEMENT OF ACCOUNT

The Weaving Shed

14 Industrial Street
Hightown
Telephone 111 01357

Sew and Sew

92 The Avenue
Lowtown 30-Apr-09

Date Reference Debit Credit Balance

$ $ $
2009
April 3 Invoice Number I 3624 408 00 408 00
9 Credit Note Number C529 48 00 360 00

The Last Amount shown in the balance column is the amount due.
Terms: 2 1/2 % cash discount if account is paid by 31 May 2009.
Cheques – Aim
• A signed unconditional order to a bank to pay a
stated sum from the payer’s savings or current
account.
• Other method of payment through banking system
than credit transfers and standing orders.
Cheques – Procedure
• A book of pre-printed cheques issued by bank to
customer.
• Customer fill in the date and amount in words
and numbers, along with the supplier’s name.
• Customer will sign the cheque which has to be
matched with the bank’s record.
Cheques – Recording
• Customer uses the counterfoil to record the
payment in the cash book and to note the discount
in the discount received column.
• Supplier receives the cheque and deposited to the
bank with paying-in slip completed. The counterfoil
of the slip is used to record the payment received in
the cash book and to note the discount in the
discount allowed column.
Cheque
The ABC Bank Limited South Disctrict Branch Delhi

Date Date 28th May 2009

28th May
2009 Pay The Weaving Shed
Payee Three hundred & fifty one dollars $ 351-00
The Weaving only
Shed S. Dhoni
Trading as Sew and Sew
$ 351-00

Cheque No Cheque No Branch Sort Code Account No

00039 00039 05 22 30 3996829

Cheque Actual
Counterfoil Cheque
Receipt – Aim

• Written acknowledgement of money received

• Proves amount was paid
• A cheque can act as a receipt.
• Normally only issued for cash payments
Receipt – Recording

• The supplier records payment received in the

cash book and to note any discount.
• The customer records payment in the cash book
and to note any discount.
Receipt
RECEIPT RECEIPT NO.: 44 S
The Weaving Shed 14 Industrial Street Hightown

Received from Sew and Sew the sum of $ 351 (three hundreds and fifty one dollars) by
cheque

30 May 2009 Paula King Chief Cashier

Business Documents and Books of Prime Entry Records
Documents Supplier Customer

Books of Prime Corresponding Books of Prime Corresponding

Entry Entry

Invoice Sales Journal Sales Ledger Purchases Journal Purchases Ledger

Debit Note No entries

Credit Note Sales Returns Sales Ledger Purchases Returns Purchases Ledger
Journal Journal

Statement of No entries No entries, unless there are errors

Account rectified

Cheque Cash Book (Bank Sales Ledger Cash Book (Bank Purchases Ledger
column and if any column and if any
Discount Allowed Discount Received
column) column)
Receipt Cash Book (Cash Sales Ledger Cash Book (Cash Purchases Ledger
column and if any column and if any
Discount Allowed Discount Received
column) column)