Accounts by BPP Learning Media

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Extra resources for Accounts

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1 Types of source document Whenever a business transaction takes place, involving sales or purchases, receiving or paying money, or owing or being owed money, it is usual for the transaction to be recorded on a document. These documents are the source of all the information recorded by a business. Documents used to record the business transactions in the 'books of account' of the business include the following. 2 • Quotation. A business makes a written offer to a customer to produce or deliver goods or services for a certain amount of money.

After some investigations, she buys what Uncle Grant has asked for, paying £300 in cash to the supplier. Uncle Grant accepts delivery of the goods and agrees to pay £350 to Courtney for them, but he asks if she can wait until the end of the month for payment. Courtney agrees. (d) The next market day approaches, and Courtney buys herbs and spices costing £800. Of these purchases £750 are paid in cash, with the remaining £50 on seven days' credit. Courtney decides to use Bianca's services again as an assistant on market day, at an agreed wage of £40.

53 Part A: Basic Accounting NOTES It is very important that you understand the principles described so far. Do not read on until you are confident that you understand the solution to this example. 4 Creditors and debtors Definition A creditor is a person to whom a business owes money. A creditor is a liability. A trade creditor is a person to whom a business owes money for debts incurred in the course of trading operations. In an examination question, this term might refer to debts still outstanding which arise from the purchase from suppliers of materials, components or goods for resale.

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