Class 10 Exam  >  Class 10 Notes  >  Accounting for GCSE/IGCSE  >  Introduction to Business Documents

Introduction to Business Documents | Accounting for GCSE/IGCSE - Class 10 PDF Download

Purpose of Business Documents

What are business documents?

  • Business documents serve as records for all transactions.
  • They act as sources of information to be entered into the books of prime entry. 
    • They aid in error checking.
    • Business documents play a crucial role in maintaining transactional records.

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

  • A trade discount refers to a decrease in the selling price of goods or services.
  • It is commonly offered when a customer makes bulk purchases or is a loyal, repeat buyer.
  • Before a transaction occurs, the trade discount is applied, and the reduced amount is recorded in the books of prime entry.
  • The value of the trade discount does not get entered into the books of prime entry and is not a component of the double-entry system.

Cash Discount

  • A cash discount is a reduction offered to customers who pay their credit invoices early.
  • Suppliers specify a deadline for payment to qualify for the cash discount.
  • The original amount before the cash discount is logged in the books of prime entry.
  • When a customer pays early and claims the cash discount, the discount amount is also recorded.

Question for Introduction to Business Documents
Try yourself:
What is the purpose of business documents?
View Solution

The document Introduction to Business Documents | Accounting for GCSE/IGCSE - Class 10 is a part of the Class 10 Course Accounting for GCSE/IGCSE.
All you need of Class 10 at this link: Class 10
21 videos|26 docs|12 tests

FAQs on Introduction to Business Documents - Accounting for GCSE/IGCSE - Class 10

1. What is the difference between a trade discount and a cash discount?
Ans. A trade discount is a reduction in the list price of a product offered to businesses purchasing in large quantities or meeting certain criteria, while a cash discount is a reduction in the invoice price given to customers who pay within a specific time frame.
2. How do trade discounts benefit businesses?
Ans. Trade discounts help businesses increase sales volume by incentivizing customers to purchase in larger quantities, improve cash flow by reducing the need for credit, and strengthen relationships with loyal customers.
3. What are the common terms and conditions for cash discounts?
Ans. Common terms and conditions for cash discounts include a specific discount percentage offered for payment within a set number of days (e.g., 2/10, net 30), with the discount usually indicated on the invoice.
4. How are trade discounts calculated?
Ans. Trade discounts are typically calculated as a percentage of the list price, with the discount percentage varying based on factors such as the quantity purchased, customer loyalty, or promotional offers.
5. Why are trade and cash discounts important for businesses?
Ans. Trade and cash discounts are important for businesses as they help attract customers, increase sales revenue, improve cash flow, reduce inventory holding costs, and maintain competitive pricing in the market.
Related Searches

Semester Notes

,

Extra Questions

,

Viva Questions

,

Important questions

,

shortcuts and tricks

,

Objective type Questions

,

Introduction to Business Documents | Accounting for GCSE/IGCSE - Class 10

,

past year papers

,

Introduction to Business Documents | Accounting for GCSE/IGCSE - Class 10

,

ppt

,

Previous Year Questions with Solutions

,

pdf

,

Introduction to Business Documents | Accounting for GCSE/IGCSE - Class 10

,

practice quizzes

,

Free

,

video lectures

,

Exam

,

MCQs

,

study material

,

Sample Paper

,

mock tests for examination

,

Summary

;