8/9/2019 POB - Grade 10 - Lesson 34 - Business Documents
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POB Grade 10 Business Documentation
Hire Purchase is a form of credit buying, where the buyer takes
goods from the supplier and agrees to pay forthem in installments.
After the supplier does a background check on the buyer to
determine whether it is safe to
sell to the customer, a hire purchase contract is then prepared
to outline the following:
1. The goods do not belong to the buyer until he has made all
the installment payments.
2. The buyer cannot sell the goods while he is still making
installment payments on these goods.
3. one of the money will be refunded if the buyer decides to
return the goods.!. The seller may repossess the good if the buyer
fails to make installment payments, but the seller gi"e the
buyer notice before repossessing goods.
Business Documents
The complete process of buying or supplying goods and ser"ices
is known as a transaction. At "arious stages in
the transaction, documents are created. These documents pro"ide
proof that the business transaction has takenplace and are called
#paper$work% or #business documents.%
Purposes of Business Documents
1. To pro"ide proof that a transaction took place.
2. To pro"ide information about suppliers&
products'ser"ices, style, si(es and prices etc.3. To pro"ide
financial'accounting information used to calculate company&s
profits and help managers
make decisions to impro"e the company&s performance.!. )sed
for future reference e.g. if a customer has some concern about his
bill, the company can check its
record of the transaction,, which be in the company&s file
of on its computer.
*. +a"es time as information can be easily retrie"ed when
reuired.
Common Types of Business Documents
1. Requisition This is a form filled out by one department and
sent to the +tores department of the samecompany where goods are
stored. The reuisition is a list of items being reuested by the
department
that is sending the reuisition. The reuisition must be
signed'appro"ed by the rele"ant person in the
department who is making the reuest, usually the department
super"isor or manager.
2. Letter of nquiry +ometimes a company&s +tores -epartment
does not ha"e particular items that
another department might need at that that particular time. n
this case, the company may choose to
source the goods from another company. The letter of enuiry is
therefore sent to a seller /or "ariousselling companies0 to get
information such as: details about goods, prices of goods, whether
goods are
a"ailable, how long will it take for goods to be deli"ered and
what is the seller&s payment procedure etc.
3. Proforma!"uotation the supplier responds to the letter of
enuiry by pro"iding a document used to
show the description and prices of items on the letter of
inuiry. t shows the buyer how much it will
cost to purchase the goods reuired.
!. Purchase Order this document is then sent to the supplier by
the customer as an official reuest for
the goods needed. This can be done through a letter of the
customer&s special preprinted order form
which has a specific order number printed on it. The purchase
order outlines the eact description of thegoods being ordered and
sometimes state when the goods are epected /if they are needed
urgently or
not0 and what terms of payment will be used /cash on deli"ery
..-. or credit and the length of the
credit period, 1! days, 34 days etc.0
*. #n$oice% Pac&a'in' (ote% De)i$ery (ote and *d$ice (ote
the in"oice gi"es full details of the goods
sent to the customer. t shows uantity and description of items
sold, any taes charged, discountsallowed and the terms of payment
etc.
5. De+it (ote this document is sent to a customer if the
customer was undercharged by mistake on an
in"oice. The mistakes could be errors in calculation of prices,
taes and discounts or if n item that thecustomer recei"ed was left
off the in"oice. The debit note outlines the additional to be paid
by the
customer.
6. Credit (ote this document is issued to customers in the
following cases:
f the customer was o"ercharged by mistake.
f some of the goods were damaged while being transported.
f the customer returns some goods which they had pre"iously
bought.
Therefore the credit note is used to reduce the amount that the
customer owes as it outlines the amount
that the customer should not pay.
8/9/2019 POB - Grade 10 - Lesson 34 - Business Documents
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7. ,toc& Card this document gi"es a detailed description of
the stock'goods recei"ed by a business
/stock on hand'stock at the business0. Ad8ustments are made to
the card each time goods are recei"ed orissued /sold'used up0.
9. ,tatement!,tatement of *ccount this document is prepared by
the supplier and sent to the customerwhen payments are due. t
outlines all the transactions that the customer has done with the
supplier o"er
a particular period of time. t shows a list of in"oice totals,
credit and debit note totals, payments made
by the customer as well as the total still owing by the
customer.
14. Bi)) of Ladin' this document is used when transporting goods
by ship. t is issued by the captain of
the ship in three copies /one for the seller consignor;, one for
the buyer consignee; and the ship captain
keeps the other copy0. The bill of lading gi"es information on
the description of the goods beingdeli"ered, the name of the seller
and port the goods are shipped from, as well as the name of the
buyer
and port where the goods will be deli"ered to. The bill of
lading ser"es as a receipt for the goods and is
also a contract between the consignor and the shipping company
that is transporting the goods.
11. *ir-ay +i)) similar to the bill of lading, ecept it is used
when transporting goods by air plane.
C)ass *cti$ity.
The Accounts -epartment of oame ashment ecause it is commonly
used for official purposes $$to register a car or a boat, for
eample $$ a bill of sale may ha"e to conform to state regulations.
@or eample,
many states reuire that a "ehicle bill of sale include an
odometer reading some states reuire it to be notari(ed.
>oth parties can sign a bill of sale but, in many instances,
only the seller needs to sign it.
Things can get complicated when a bill of sale is pro"ided as
security for a loan. @or eample, if someone
pledges a car as collateral for a loan, the lender might reuire
a bill of sale for the car, to become effecti"e only
if the borrower defaults on the loan.
A bill of sale can also be used as an element of a loan. @or
eample, if youBre buying a car using financing
/installment payments0, the complete agreement can be framed as
a bill of sale, although technically the transfer
of title might not happen until all payments reuired under the
loan are made. +tate laws often regulate loan'bill
of sale combinations because some sellers or lenders may abuse
the practices described abo"e.
A bill of sale can also include warranties /promises and
assurances as to the condition or history of the item0.
