Introduction to Business Documents (Cambridge (CIE) O Level Accounting)

Purpose of Business Documents

What are business documents?

• Business documents are used to keep records of all transactions

• They are used as sources of information

  • The amounts are then entered into the books of prime entry

  • They can be used to check potential errors

What business documents do I need to know?

• Invoices

• Debit notes

• Credit notes

• Statements of account

• Cheques 

• Cheque counterfoils

• Receipts

• Paying-in slips

• Bank statements

• Petty cash vouchers

Trade Discount

What is a trade discount?

• A trade discount is a reduction in the selling price of goods or services

• Trade discount might be offered

  • If the customer buys in bulk

  • If the customer is a loyal and regular customer

• Trade discount is applied before a transaction takes place

• The discounted amount is the value that is entered into the books of prime entry

  • The value of the trade discount is not entered into the books of prime entry

  • Trade discount is not part of the double entry system

Cash Discount

What is a cash discount?

• A cash discount is offered to credit customers for early repayment of an invoice

• The supplier will state the deadline for payment in order to claim the cash discount

• The amount before the cash discount is entered into the books of prime entry

• When the customer pays early and claims the cash discount

  • The amount of cash discount is recorded in the books of prime entry