O-level commerce Notes(page4/5)

Details shown on hire purchase goods

1. Cash price of goods.
2. Total hire purchase ie cash price, finance charges.
3. Amount and number of installments.
4. Finance charges.
5. Types of goods

Importance of finance companies in hire purchase transaction

• Pay ready cash by providing capital to traders.
• Buyer is indebted to the finance house.
• Traders collects installments from debtors on behalf of finance company.
• Relieves trader of all risks of bad debts and legal responsibility.
• Makes profit from interest charged.

Credit sales agreement

• Credit sale is sale based on trust
• Written agreement is not necessary.
• Deposit is not required.
• Buyers own goods as soon as agreement is made.
• seller cannot repossess goods if customer defaults.
• Seller can sue the customer for outstanding payment.
• Installments are spread over a few months.
• A short period of repayment.
• Contract is based on trust and there is no strict legislation.
• Customer can sell the goods.
• Deal for non durable goods eg clothes.
• Interest is charge at low rate.

Business documents

1. LETTER OF INQUIRY
   • A letter written by buyer to supplier
   • Request for the following information:
     1. Type of goods available
     2. Size of goods.
     3. Price of goods.
     4. Terms of payment eg credit or discounts.
     5. Terms of delivery.
     6. Indicate the date of issue.
2. CATALOG
   • Shows price of goods.
   • Statements of sales and after sales services.
   • Used as an advertising by order firms.
   • Shows codes of products.
3. ORDER NOTE
   • Written by buyer to the suppliers.
   • Prepared in at least two copies.
   • Show names and addresses of buyer and seller
   • States expected time of delivery and method of payment
   • Quotes the catalog number or quotation number.
   • Show the quoted prices.
4. PROFOMA INVOICE
   • Sent by supplier to a potential buyer.
   • A document in the form of an invoice.
   • Contain details of goods send on consignment.
   • May be used as a quotation.
   • Shows units prices and discounts.
   • Used to apply for foreign currency.
   • Used to request payment before goods are delivered.
5. INVOICE
   • Summarize a single transaction.
   • An evidence of contract of sale.
   • A bill sent by suppliers to buyer.
   • Used when goods are sold on credit.
   • Shows details of goods in terms of:
     1. Unit price.
     2. Total price.
     3. Quantities of goods.
     4. Terms of payment.
     5. Description of goods eg color and size.
     6. Date of purchase.
     7. VAT
     8. Invoice number.
     9. Interest to be added on specific periods.
     10. Used for accounting purposes.
6. ADVICE NOTE
   • Sent by supplier to the buyer.
   • Notifies the buyer that goods are on the way.
   • Enables buyer to check whether correct oder has been dispatched.
   • Shows:
     1. Date of dispatch.
     2. Method of dispatch.
     3. Terms of dispatch.
     4. Description of goods.
     5. Names and addresses of buyer and seller.
7. DELIVERY NOTE
   • Issued by supplier to the buyer.
   • Written in duplicate.
   • Used when seller uses transport to deliver goods
   • Sent with goods.
   • Used to check state and quantity of goods.
   • Provides proof of delivery if signed.
   • shows:
     1. Addresses of buyer and supplier.
     2. Description of goods.
     3. Quantities of goods.
     4. Methods of delivery.
     5. Used as a record of proof of delivery.
8. CONSIGMENT NOTE
   • Used when transport is hired.
   • Issued in triplicate.
   • Sent together with goods.
   • Is a contract of carriage
   • State the terms and conditions of carriage.
   • Specifies the part responsible for payment of carriage and delivery.
   • Shows:
     1. description of goods.
     2. Quantities of goods.
     3. Markings or crate numbers.
     4. Freight charges.
     5. Names and addresses of consignee and consignor
     6. Address of delivery.
     7. Date of delivery.
9. CREDIT NOTE
   • Issued by supplier to buyer.
   • Used to correct an overcharge arising from return of empty bottles,overstating the invoice, return of unsatisfactory or shady goods.
   • Printed on red or pink.
   • Used when a supplier owes buyer money.
   • Shows:
     1. Names and addresses of buyer and seller.
     2. Credit note number.
     3. The overcharged amount.
     4. The reduction of amount owing.
     5. Date of issue.
10. DEBIT NOTE
    • Issued by supplier to buyer.
    • Used to top up payment for goods already delivered. Correct undercharge.
    • Shows:
      1. Names and addresses of buyer and supplier.
      2. Amount of undercharge or amount to be paid.
      3. Date of issue.
      4. Debit note number.
11. STATEMENT OF ACCOUNTS
    • Summary of transactions over a period of time- usually one month.
    • Issued by supplier to buyer.
    • Issued when goods are bought on credit.
    • Shows:
      1. Name and address of buyer and supplier.
      2. Amount due.
      3. Credit notes or adjustments.
      4. Rate of interest.
      5. Installment.
      6. Terms of payment.
      7. Reminds customer that payment is due.
12. RECIEPT
    • Issued by supplier to buyer
    • Used to acknowledge cash payments.
    • Shows:
      1. date and time of purchase
      2. Shows description of goods
      3. Unit prices
      4. Total prices
      5. Codes of goods
      6. Total paid
      7. Change if any
      8. Names of supplier
      9. Name of till operator.
13. TILL SLIP
    • Issued by supplier to buyer.
    • Shows cash payments.
    • Evidence of cash sale.

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By: T.Titus Nyakudyara
Twitter: @NyakudyaraTitus

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