Acca f3 Financial Accounting (int) Study Text
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- Goods received notes
- Credit note
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60 4: Sources, records and books of prime entry Part C The use of double entry and accounting systems Please note that businesses will design their own invoices and there may be other copies for other departments. Not all businesses will need four part invoices. A very small business may use the customer copy of the invoice as a despatch note as well. In addition, the sales invoice may be stapled to the sales order and both documents passed to the accounts department. 1.3 The credit note China Supplies sent out an invoice for 20 dinner plates, but the typist accidentally typed in a total of $162.10, instead of $62.10. The china shop has been
to do?
Alternatively, when the china shop received the plates it found that they had all been broken in the post and that it was going to send them back. Although the china shop has received an invoice for $62.10, it has no intention of paying it because the plates were useless. Again, what is China Supplies to do? The answer is that China Supplies sends out a credit note. A credit note is sometimes printed in red to distinguish it from an invoice. Otherwise, it will be made out in much the same way as an invoice, but with less detail and 'Credit Note Number' instead of 'Invoice Number'. A
overcharged. It can be regarded as a
1.4 Other documents The following documents are sometimes used in connection with sales and purchases. (a) Debit notes (b)
Goods received notes A
issuing a revised invoice after raising a credit or debit note purely for internal purposes (ie to keep the records straight). More commonly, a debit note is issued to a supplier as a means of formally requesting a credit note.
used in addition to suppliers' advice notes. Often the accounts department will require to see the relevant GRN before paying a supplier's invoice. Even where GRNs are not routinely used, the details of a consignment from a supplier which arrives without an advice note must always be recorded. Question
Fill in the blanks. 'China Supplies sends out a . . . . . . . . . . . . to a credit customer in order to correct an error where a customer has been overcharged on an . . . . . . . . . . . ..' Answer Credit note; invoice. 2 The need for books of prime entry In the course of business, source documents are created. The details on these source documents need to be summarised, as otherwise the business might forget to ask for some money, or forget to pay some, or even accidentally pay something twice. In other words, it needs to keep records of source documents – of transactions – so that it knows what is going on. Such records are made in
Key term Part C The use of double entry and accounting systems 4: Sources, records and books of prime entry 61
The main books of prime entry are as follows. (a)
Sales day book (b)
Purchase day book (c)
Sales returns day book (d)
Purchase returns day book (e)
Journal (described in the next chapter) (f) Cash book (g) Petty cash book
It is worth bearing in mind that, for convenience, this chapter describes books of prime entry as if they are actual books written by hand. However, books of prime entry are often not books at all, but rather files hidden in the memory of a computer. However, the principles remain the same whether they are manual or computerised. You may get a question on books of prime entry, also you need to know where the entries to the ledger accounts come from and how they are posted. 3 Sales and purchase day books Invoices and credit notes are recorded in day books. 3.1 The sales day book The
The sales day book is used to keep a list of all invoices sent out to customers each day. An extract from a sales day book might look like this. SALES DAY BOOK Date Invoice Customer Total amount invoiced 20X0
$ Jan 10
247 Jones & Co 105.00 248
Smith Co 86.40
249 Alex & Co 31.80 250
Enor College 1,264.60
1,487.80 Most businesses 'analyse' their sales. For example, this business sells boots and shoes. The sale to Smith was entirely boots, the sale to Alex was entirely shoes, and the other two sales were a mixture of both. Then the sales day book might look like this. SALES DAY BOOK
20X0
$ $ $ Jan 10 247 Jones & Co 105.00 60.00
45.00 248
Smith Co 86.40
86.40 249
Alex & Co 31.80
31.80 250
Enor College 1,264.60
800.30 464.30
1,487.80 946.70
541.10 Key term Key term
Exam focus point
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