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Investigating the flow of financial documents

Investigating the flow of financial documents. Stage 1 – obtaining the goods. The sequence of documents: Buyer makes out order form listing goods and prices. Seller despatches goods with delivery note . Buyer signs delivery note as proof of delivery and returns one copy to the supplier.

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Investigating the flow of financial documents

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  1. Investigating the flow of financial documents

  2. Stage 1 – obtaining the goods The sequence of documents: • Buyer makes out order formlisting goods and prices. • Seller despatches goods with delivery note. • Buyer signs delivery noteas proof of delivery and returns one copy to the supplier. • The buyer may make out a goods received note listing the items received and checked

  3. The order form To: Computer Supplies Supplier No: 123 10 Bexley Way Order No: 456 HIGHTOWN Date: 6 June 2002 HG4 7PT Delivery: 10 June Signed:Jackie EdwardsDesignation:Manager

  4. The order form – key points • Isalwayson buyer’s headed paper – giving name of firm, address, telephone no, fax, website and VAT registration no (if applicable) • Must be signedto be ‘official’ • Must give accuratedetails of quantity, description, item code and price

  5. The delivery note To: Jones and Kelly Date: 10 June 2002 Riverside Walk HIGHTOWN HG2 8PP

  6. The delivery note – key points • Is on seller’s headed paper • Contains no prices • Buyer signs and keeps one copy • Buyer should comment if goods or package is damaged Received in good condition (or comment here): Goods received but not checked Signed:Jackie EdwardsDate:27 June 2002 Please print name here:JACKIE EDWARDS

  7. Goods received note Supplier: Computer Supplies GRN No: 1234/12 10 Bexley Way GRN date: 11.6.02 HIGHTOWN Carrier: Comp Supp Supplier A/c No: 123 Del note date: 10.6.02 Checker:David Evans

  8. Goods received note – key points • An internal document usually used in large organisations • Records items received and any discrepancies/faults • Sent to accounts department so that they know whether the supplier should be paid or not.

  9. Stage 2 – payment notification The sequence of documents: • Seller makes out invoice listing goods, price, discounts and VAT • Credit noteis issued if any goods are returned • End of month – seller issues statement of accountlisting all transactions and balance owing. May include remittance adviceslipfor buyer to return with payment

  10. The invoice To: Jones and Kelly Riverside Walk HIGHTOWN HG2 8PP

  11. The invoice – key points • Alwayson headed paper • Invoice shows VAT registration number • All items listed separately, then totalled • VAT added to sub-total to give total due • Terms = date when payment due

  12. Credit note To: Jones and Kelly Riverside Walk HIGHTOWN HG2 8PP

  13. Credit note – key points Only issued when there is a problem and a refund is required, e.g. • Goods damaged • Incorrect goods delivered – and returned • Fewer goods delivered than charged on invoice • Overcharge on invoice

  14. Statement of account To: Jones and Kelly Customer a/c no: 789 Riverside Walk Credit limit: £10,000 HIGHTOWN HG2 8PP Date: 30 June 2002

  15. Statement of account – key points • Sent at end of each month • Starts with any amount owing from previous month • Adds all invoicesto amount owed • Deducts all credit notes and payments from amount owed • Ends with current amount due • May include remittance advice slip to be returned to supplier along with the payment

  16. Remittance advice From: Jones and Kelly Customer a/c no.: 789 Riverside Walk HIGHTOWN HG2 Statement date: 30/6/02 Amount enclosedCheque no. Your refDate of payment

  17. Remittance advice – key points • Often tear-off form at end of statement • Customer includes form with payment • Supplier can immediately link payment to customer and statement.

  18. Stage 3 – making payment The sequence of documents: • Buyer checks invoice and statement • If correct, normally pays by cheque. Note: receiptsmay be issued by seller if cash payments are received for any reason

  19. Cheques – key points • Cheques printed by banks • Business cheques include company name • May be completed by hand or printed by computer • Items completed are: date, payee, amount in words and figures • Cheques for large amounts signed by more than one person • Counterfoil states reason for payment

  20. Cash sale receipt EASYPRINT MAIN STREET HIGHTOWN Name: John Smith Receipt no.: 123 Address: 2 Windy Road Date: 10 June 2002 Hightown 50 coloured photocopies £5.50 VAT @ 17.5% £0.96 Total paid £6.46 Received by:Paula King

  21. Cash sales receipt – key points • Proves amount was paid • Should be kept safely in case goods faulty • Normally only issued for cash payments – not required for cheque payments

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