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Chapter 4 Review Qestion

Chapter 4 discusses various transactional documents used in business, including invoices, credit notes, debit notes, and statements of account. Invoices serve as records for credit sales, while credit notes acknowledge returned goods and debit notes request adjustments for returns. Additionally, a statement of account summarizes a customer's account activity, helping both suppliers and customers track transactions and ensure accuracy.

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12 views1 page

Chapter 4 Review Qestion

Chapter 4 discusses various transactional documents used in business, including invoices, credit notes, debit notes, and statements of account. Invoices serve as records for credit sales, while credit notes acknowledge returned goods and debit notes request adjustments for returns. Additionally, a statement of account summarizes a customer's account activity, helping both suppliers and customers track transactions and ensure accuracy.

Uploaded by

kaythi khaing
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Chapter 4

Chapter review Question

a Invoice: Invoices are transactional documents used by a business at the time of a credit sale. It
accompanies the goods being delivered to a customer. The customer, who receives the original
invoice, uses it as a record of their credit purchases. The supplier retains a copy of the invoice as
a record of their credit sales. Hence, the same document can be a sales invoice or a purchases
invoice.

b Credit note: A credit note is issued by a supplier to a customer to acknowledge the receipt of
goods returned and let the customer know the value of the full allowance being given for goods
returned by them. A credit note could also be issued by a supplier to a customer to inform them
that their account has been credited, when there has been an overcharge on an invoice they have
received for goods they bought on credit.

c Debit note: A debit note is a document issued by a customer to a supplier when returning
goods originally bought on credit. The note should contain details of the quantity and value of
the goods being returned as well as the total anticipated credit amount. This amount should
reflect the trade discount allowed at the time of the credit purchase. A debit note is a request to
the seller to reduce the total of the original invoice and issue a credit note; therefore, no entries
are made in the accounting records when a debit note is received for returns. A debit note can
also be issued by a seller instead of an invoice to revise (upwards) the amount of an invoice
already issued. This happens when the original invoice amount was incorrectly calculated.

d Statement of account: Suppliers usually send a monthly statement of account to their


customers. It is a periodic summary of a customer’s account activity, showing their credit
purchases, discounts allowed, returns and payments made during the month. It is a copy of the
customer’s account in the supplier’s books. The purpose of a statement of account is to remind
customers of the amount due to their suppliers. The customer can also use the statement of
account to check against their own records to ensure that no errors have been made by either the
supplier or themselves.

5 A trade discount is given to customers who buy in bulk. It is sometimes given to repeat
customers to reward regular business.

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