(a) Give two uses of each of the following documents in a business transaction.
(i) Proforma invoice
(ii) Advice note
(iii) Credit note
(iv) Statement of account
(v) Receipt.
Explanation
(a) Proforma invoice can be used for:
(i) It states the terms of sale to which the customer is free to accept or reject goods sent on inspection.
(ii) It serves as a quotation in reply to an enquiry.
(iii) If the customer is a commission agent, it gives him the idea of the price at which he should sell the goods.
(iv)As a polite request for payment before goods are delivered / if the trader is unwilling to sell goods on credit.
(b) Advice note can be used for:
(i) It shows the terms of dispatch
(ii) It shows the method of dispatch
(iii) It shows the date of dispatch
(iv) It lists details of the goods
(v) It is used to inform the customer that his goods have been despatched.
(c) Credit note can be used for:
(i) It is sent to reduce an overcharge.
(ii) If the customer returned damaged goods.
(iii) When packing cases charged on the invoice are returned.
(d) Statement of account can be used for:
(i) it shows charges, commissions and interest passed to a customer’s account.
(ii) It shows the unpaid balance.
(iii) It shows the number of purchases made by the customer and the payments.
(iv) It shows the terms of payment for the amount owed.
(v) It draws attention to overdue accounts.
(e) Receipt can be used for:
(i) It is used for auditing purposes.
(ii) It shows the date of payment.
(iii) It is a bonafide title to ownership of property.
(iv) It shows evidence of payment.
(v) It is used for auditing purposes.