Theory question 110
Purchase and Sale of GoodsCommerce 2 (answer any five questions)
Give two uses of each of the following documents in business transaction:
(i) Pro forma invoice
(ii) Advice note
(iii) Credit note
(iv) Statement of account
(v) Receipt
Show the model answer
(i) Pro forma invoice: sent when the buyer must pay before goods are dispatched; sent with goods on approval or sale or return; used as a quotation; used by importers to obtain import licence/foreign exchange.
(ii) Advice note: tells the buyer that the goods have been sent and how; enables the buyer to check the goods on arrival and prepare to receive them.
(iii) Credit note: corrects an overcharge on an invoice; records goods or empties returned; reduces the amount the buyer owes; allowance for damaged goods.
(iv) Statement of account: summarises transactions with a customer over a period; shows the balance owed and reminds the buyer to pay; helps both parties check their records.
(v) Receipt: evidence of payment; used for records and accounting; can be used to claim refunds or exchange of goods; proof of ownership.
Two uses for each document.