Documents That Pass Through Buyers And Sellers During Business Transaction

Business Studies
Topic Documents That Pass Through Buyers And Sellers During Business Transaction
The following documents are documents used by sellers and buyers during business transaction:
1. Letter Of Enquiry
This is a business document sent from the prospective buyer to the seller or supplier asking the seller whether he has particular goods in stock and the prices or terms at which he is willing to supply them. An enquiry may also come orally from a customer or intending one who may walk into the company and demand certain information orally concerning the product of the company.
2. Quotation
This is a reply to a letter of enquiry. Therefore in reply to a letter of enquiry, the seller sends a quotation to the buyer stating the goods he has in stock and the prices at which he is willing to supply the goods including the terms of payment.
3. Price List
This is a list of all the goods the seller has in stock and their prices. In reply to a letter of enquiry the seller may send price list instead of quotation. A typical price list of a company has been earlier shown.
4. Invoice
Invoice is a business document that goes from the seller to the buyer. It shows the particulars of goods sold, date of sales, invoice number, amount of goods sold and the signature of both buyer and seller. Credit invoice is raised when the goods are sold on credit, while cash invoice is issued, when cash sales are made. Invoice therefore is an evidence of purchase or sale transaction.
5. Order
An order is sent from the buyer to the seller in reply to a quotation . An order states the exact or actual quantity of goods which the buyer wish to purchase.
6. Delivery Note
A delivery note is sent from the seller to the buyer. The delivery note is given to the person who delivers the goods (usually the company’s driver) who would require the person who received the goods (the buyer) to sign the delivery note and give back to the seller through the driver or the person that delivers the goods. This is evidence that he had received such goods.
7. Performa Invoice
Performa invoice is one of the business documents issued by a seller to the buyer. It has the same particulars as an invoice but with the word “PROFORMA” written boldly at the top of the invoice.
A performa invoice gived the buyer an idea of the price of the goods at which the seller will supplly the goods to him (the buyer).
A performa invoice is not an evidence of transaction, because no transaction has taken place, rather, it is an ideas of the terms of transaction. It could also be sent to an agent who accepts the goods on sale return basis.
8. Statement Of Account
Statement of Account is a document sent by the seller to the buyer. The statement contains details of transactions for the period. It shows all the debits and all the credits to the accounts, together with the Balance not paid. It is exactly a copy of the ledger accounts and therefore shows the balance unpaid as at the date of the statement. The statement is sent at regular intervals say fornightly, monthly or quaterly. The frequency at which is is snet depends on the kind of business and the degree of need to have customers notified about the state of their qccounts with the seller. Statement of account is polite way of demanding settlement of amount outstanding in the accounts.
It could be presented in ‘T’ form especially if the ledger accounts is in ‘T’ form, and it could also be presented in vertical form. Verticastatement of account is more popular nowadays as vertical ledgers (because of their advantages) are replacing ‘T’ ledgers. “T” Ledgers have many shortcomings.

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