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Accounting For Sales & Sales Documentation
CASH SALES
CUSTOMER ---> SALES ASSISTANT
- CASH
- CHEQUE
- CREDIT CARD
- DEBIT CARD
CUSTOMER <--- SALES ASSISTANT
- TILL RECEIPT
- COPY CREDIT/DEBIT
- CARD VOUCHER
Invoice
- a document sent by the supplier to the buyer
- giving full details of the goods sold and the prices of the good
Discounts
Types:
- Settlement (Cash) Discount - a reduction of the amount to pay if paid for promptly.
- Trade Discount - a reduction on the list price of goods for trade customers.
Quantity (Bulk) Discount - a reduction for buying in large quantities
VAT
- VAT – Value Added Tax, Sales Tax, Indirect Tax
- Tax on sales and purchases
- Different rates for various categories of goods and services... (0%, 5%, 20% etc.)
- Standard rate in the UK is now 20%
- Exempt items are not chargeable to VAT
- VAT registered businesses charge VAT on sales pay it to the HMRC; and
- Receives VAT suffered on qualifying purchases back from the HMRC
Invoice Calculations – 5-Step
Step 1
- Calculate Total Price before discount
- [Quantity x unit price]
Step 2
- Calculate trade discounts
- Discount % x Total price
Step 3
- Calculate amount net of trade discount = NET amount
- [Total Price - Discount amount]
Step 4
- Calculate VAT using the NET amount
- [NET x VAT%]
Step 5
- Calculate Invoice TOTAL by adding VAT to the NET
- [TOTAL = NET Amount + VAT Amount]
Invoice Calculations – 7-Step
Step 1
- Calculate Total Price before discount
- [Quantity x unit price]
Step 2
- Calculate trade discounts
- Discount % x Total price
Step 3
- Calculate amount net of trade discount - NET amount
- [Total Price - Discount amount]
Step 4
- Calculate the settlement discount - if available
- [NET Amount x Settlement Disc%]
Step 5
- Reduce the NET amount by the settlement discount
- [NET Amount - Settlement Disc Amt]
Step 6
- Calculate VAT using this lower amount
- [New NET x VAT%]
Step 7
- Calculate Invoice TOTAL by adding VAT to the NET amount before deducting settlement discount
- [TOTAL = NET Amount + VAT Amount]
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