Topic 7 - Invoices

Activity and Task Shortcut Bar  (please read the material below before attempting the activity)
Activity Q - 1	Activity Q - 2	Activity R	Activity S	Activity T	Activity U	Task 13

In this topic you will learn:

the main features of an invoice

how invoices are prepared

perform the calculations to produce accurate invoices including GST and    discounts

how invoices are distributed

how invoices are filed for auditing purposes

 

Purchase order	(when goods are required)
Delivery Docket	sent with the goods, does not include price
Purchase Invoice	sent to the purchaser setting out the amount owing
Credit note - purchases	given if stock is returned or customers overcharged
Remittance Advice	details the transaction and covers the cheque sent with the payment
Cheque/EFTPOS payment
Receipt	send to customer, proof of payment

The Invoice in the Document Cycle

You have already looked at the document cycle in Topic 1.

You have also sighted an invoice when learning about the requirements for financial documents

Now try Activity Q -1

Now try Activity Q - 2

 

The Invoice : The Main Features

An invoice is prepared for goods sold to customers on credit. It sets out the amount owed by the purchaser. This is when the purchaser has possession of the goods.

Discounts

When you look at an invoice, you will notice there is a space for a discount. A discount is a % off the total price of a good.

Trade Discounts

Trade discounts are given to people within the industry (trade) to encourage them to buy from that business. This would include plumbers, electricians and mechanics. Even schools can get discounts on the purchase of books if ordering large quantities.

A trade discount is calculated as a % of  the list price.

For example:

Now try Activity R

Cash Discounts

Cash discounts are often offered to customers for early payment of an account. It is not calculated on the invoice but may be explained in the terms of trade section.

The calculation is similar to the trade discounts

For example:

Now try Activity S

Goods and Services tax

Recently a Goods and Services tax (GST) was applied to goods and services at the point of sale. This was to replace a complicated system of sales tax. The GST is a percentage of the price of the product.

For Example

The $45 is passed on to the Federal Government

  Now try Activity T

Source Documents

Source documents are the evidence of all the transactions that have occurred in the business. By law businesses are required to record certain activities for taxation purposes. These source documents also provide valuable information about the performance of the business. Some of these source documents are generated by:

  Go to Task 13

Checking for Problems

When Swaggies receives goods, the staff always check the contents of the package with the delivery docket at the time of unpacking

Three things must occur:-

1. The goods are intact

2. The goods match the goods ordered.

3. The order form, delivery docket and invoice agree.

This is called a validity check

Now try Activity U

Now try Activity V

Batching and Distributing Invoices

Batching is where documents of the same type are grouped or bundled together on a regular basis (eg. monthly) for further processing ( manually or electronically).

Each group (or category) is usually given a code, which is an abbreviated form of the category's name.

The code may be numerical (1,2,3) or alphabetical (A,B,C)  or both. You notice that each unit of competency in this course has a code. The code for this unit is: BSBCMN207A

This code makes it easier to process the document especially when using a computerised system.

Batch Control Slips

When batching financial documents a batch control slip is often used. It contains

Batch number	Batch type	Dates covered
Number of documents	Total batch documents	Name of the person preparing and checking the batch

When the Batch Control Slip is filled in it is placed on top of the group of documents it summarises.

What happens to Batch Control Slips

For security reasons businesses will separate responsibilities among staff managing the financial records. There are two main areas of responsibility:- Select the picture to view responsibilities

Accounts Receivable	Accounts Payable
Julie - Accounts Receivable Clerk at Swaggies	Trish - Accounts Payable Clerk at Swaggies

This is the end of Topic 7.  Now try Topic 8

Julie - Accounts Receivable Clerk