Accounting – 2.2 Business documents | e-Consult
2.2 Business documents (1 questions)
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Here's how the business would use the documents:
- Invoice (£250): The invoice initially records the £250 expense. This would be recorded in the business's accounts as a liability (money owed).
- Credit Note (£50): The credit note reduces the amount owed. The £50 would be deducted from the original £250 invoice amount. This means the business only owes £200 to Office Supplies Ltd.
- Cheque Counterfoil: The cheque counterfoil confirms the payment of £200 to Office Supplies Ltd. This would be recorded in the business's accounts as a payment reducing the amount owed to the supplier.
- Receipt (£100): The receipt for £100 from a customer is irrelevant to the calculation of the amount paid to Office Supplies Ltd. It represents a separate transaction.
To calculate the net amount paid to Office Supplies Ltd, the business would subtract the credit note amount from the original invoice amount: £250 - £50 = £200. The cheque counterfoil confirms that £200 was paid. The accounting records would reflect a reduction in the amount owed to Office Supplies Ltd by £50 (credit note) and a payment of £200.