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Office Documents
Invoice
An invoice orbill is acommercialdocumentissued by asellerto thebuyer, indicating the
products, quantities, and agreedpricesfor
products orservicesthe seller has provided the
buyer. An invoice indicates the sale transaction
only.Payment termsare independent of the
invoice and are negotiated by the buyer and the
seller. Payment terms are usually included on the
invoice. The buyer could have already paid for
the products or services listed on the invoice.
Buyer can also have a maximum number of days
in which to pay for these goods and is sometimes
offered a discount if paid before the due date.
In the rental industry, an invoice must include a
specific reference to the duration of the time
being billed, so in addition to quantity, price and discount the invoicing amount is also based
on duration. Generally each line of a rental invoice will refer to the actual hours, days, weeks,
months, etc., being billed.
From the point of view of a seller, an invoice is asales invoice. From the point of view of a
buyer, an invoice is apurchase invoice. The document indicates the buyer and seller, but theterm invoice indicates money is owed orowing. In English, the context of the term invoice is
usually used to clarify its meaning, such as "We sent them an invoice" (they owe us money)
or "We received an invoice from them" (we owe them money).
There are different types of invoices:
Pro formainvoice Inforeign trade, apro forma invoice is a document that states a
commitment from the seller to provide specified goods to the buyer at specific prices. It is
often used to declare value forcustoms. It is not a true invoice, because the seller does not
record apro forma invoice as anaccounts receivableand the buyer does not record apro
forma invoice as anaccounts payable. Apro forma invoice is not issued by the seller until theseller and buyer have agreed to the terms of theorder. In few cases,pro forma invoice is
issued for obtaining advance payments from buyer, either for start of production or for
security of the goods produced.
Credit memo- If the buyer returns the product, the seller usually issues a credit memo for
the same or lower amount than the invoice, and then refunds the money to the buyer, or
the buyer can apply that credit memo to another invoice.
Commercial invoice- acustomsdeclaration form used in international trade that describes
the parties involved in the shipping transaction, the goods being transported, and the value
of the goods.
[6]
It is the primary document used by customs, and must meet specific customs
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requirements, such as theHarmonized Systemnumber and the country of manufacture. It is
used to calculatetariffs.
Debit memo - When a company fails to pay or short-pays an invoice, it is common practice
to issue a debit memo for thebalanceand any late fees owed. In function debit memos are
identical to invoices.
Self-billing invoice - A self billing invoice is when the buyer issues the invoice to himself (e.g.
according to the consumption levels he is taking out of avendor-managed inventorystock).
The buyer (i.e. the issuer) should treat the invoice as an account payable, and the seller
should treat it as an account receivable. If there is tax on the sale, e.g. VAT or GST, then
buyer and seller may need to adjust their tax accounts in accordance with tax legislation.[7]
Evaluated receipt settlement (ERS) - ERS is a process of paying for goods and services from a
packing sliprather than from a separate invoice document. The payee uses data in the
packing slip to apply the payments. "In an ERS transaction, the supplier ships goods based
upon an Advance Shipping Notice (ASN), and the purchaser, uponreceipt, confirms theexistence of a corresponding purchase order or contract, verifies the identity and quantity of
the goods, and then pays the supplier."[8]
Timesheet - Invoices for hourly services such as bylawyersandconsultantsoften pull data
from atimesheet. A Timesheet invoice may also be generated byOperated equipment
rental companieswhere the invoice will be a combination of timesheet based charges and
equipment rental charges.
Invoicing - The term invoicing is also used to refer to the act ofdeliveringbaggageto aflight
companyin anairportbefore taking a flight.[citation needed]
Statement - A periodic customer statement includes opening balance, invoices, payments,
credit memos, debit memos, and ending balance for the customer's account during a
specified period. A monthly statement can be used as a summary invoice to request a single
payment for accrued monthly charges.
Progress billing used to obtain partial payment on extended contracts, particularly in the
construction industry (seeSchedule of values)
Collective Invoicing is also known as monthly invoicing inJapan. Japanese businesses tend to
have many orders with small amounts because of the outsourcing system (Keiretsu), or of
demands for less inventory control (Kanban). To save the administration work, invoicing isnormally processed on monthly basis.
Continuation or Recurring Invoicing is standard within the equipment rental industry,
including tool rental. A recurring invoice is one generated on a cyclical basis during the
lifetime of a rental contract. For example if you rent an excavator from 1 January to 15 April,
on a calendar monthly arrears billing cycle, you would expect to receive an invoice at the
end of January, another at the end of February, another at the end of March and a final Off-
rent invoice would be generated at the point when the asset is returned. The same principle
would be adopted if you were invoiced in advance, or if you were invoiced on a specific day
of the month.
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Electronic Invoicing is not necessarily the same as EDI invoicing. Electronic invoicing in its
widest sense embraces EDI as well as XML invoice messages as well as other format such as
pdf. Historically, other formats such as pdf were not included in the wider definition of an
electronic invoice because they were not machine readable and the process benefits of an
electronic message could not be achieved. However, as data extraction techniques have
evolved and as environmental concerns have begun to dominate the business case for theimplementation of electronic invoicing, other formats are now incorporated into the wider
definition.
Utility bills
Bills fromutilitycompanies are based on measured (metered) use of electricity, natural gas or
other utilities at a residence or business.[9][10]When an individual or business applies for
service from the utility (opens an account), he can signs an agreement (contract) to pay for
his metered use of the utility.
Purchase ledger
A purchase ledger is a system inaccountancyby which a business records and monitors its
creditors. The purchase ledger contains the individual accounts of suppliers from whom the
business has made purchases oncredit. Information oninvoicesandcredit notesreceived,
and payments made, are recorded in the supplier's account using thedebits and credits
system, with thebalanceof each account at a given moment representing the amount
currently owed to that supplier.
Historically, the purchase ledger was maintained in book form, hence the termledger, but in
modern practice it is much more likely to be held on computer usingaccountancy softwareor
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aspreadsheet. The purchase ledger will ordinarily hold a credit balance, unless credit notes or
over-payments exceed the credit balance.order form).
The purchase ledger will ordinarily hold a credit balance, unless credit notes or over-
payments exceed the credit balance.order form)
Debit Note
A document used by a purchaser to inform a vendor of the quantity and dollar amount ofgoods being returned, and requesting that the dollar amount be returned to the purchaser. A
debit note is often used to return goods on credit. The vendor then issues a credit note to the
purchaser indicating that the goods have been received, and that the purchaser will not have
to pay for them.
Also known as a "debit memo".
Debit notes are generally used in business-to-business transactions. Such transactions often involve
an extension of credit, meaning that a vendor would send a shipment of goods to a company before
the goods have been paid for. Although real goods are changing hands, until an actual invoice is
issued, real money is not. Rather, debits and credits are being logged in an accounting system to
keep track of inventories shipped and payments owed.
Receipt
A receipt is a written acknowledgment that a specified article or sum of money has been received. A
receipt records the purchase of goods or service obtained in an exchange. A receipt and a bill are not
the same, they are two different things.
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In English speaking countries, the term most frequently applies
to the printed record given to a consumer atcheckoutthat lists
the purchases made. The total amount of thetransaction
includingtaxes,discountsand other adjustments, the amount
paid and themethod of payment. Increasingly, these receipts
may also include messages from the retailer,warrantyor return
details, special offers, advertisements orcoupons. Receipts may
also be provided for non-retail operations such as banking
transactions. A receipt is a legal document.[2]
In many countries,
notably the United States of America, it is mandatory by law for
retailers, and individuals, have to show receipts and store
information about every receipt, so that the tax authority, or
IRScan check that sales are not hidden
Order Form
A purchase order (PO) or
Order From is a
commercialdocument
issued by abuyerto a
seller, indicating types,
quantities, and agreed
prices for products or
services the seller willprovide to the buyer.
Sending a purchase order
to a supplier constitutes a
legal offer to buy products
or services. Acceptance of
a purchase order by a seller
usually forms acontract
between the buyer and
seller, so no contract exists
until the purchase order is
accepted. It is used tocontrol the purchasing of
products and services from
external suppliers.[1]
Creating a purchase order
is typically the first step of
theOrder-to-cash process
in anERP system. Examples of SaaS providers automating this process includeTradeCard
andGT Nexus.
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BANKING DOCUMENTS
Deposits or pay-in-slip
Cheques
Demand drafts
Debit and credit note
Vouchers
DEPOSITS AND WITHDRAWALS SLIP:
The deposits are made by filling up a pay-in-slip. The form of the pay-in-slip is:
It is used to deposit money in the bank and returned to the depositor.
It has the signature of the cashier, as receipt.
It gives the details regarding the date, the amount deposited.
CHEQUES
A cheque is an unconditional order on the bank made by the client instructing the bank to pay a
certain sum of money to the person named in the cheque or his order or the bearer. This
instrument is very safe and convenient method of making payments or withdrawing money from a
bank.
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TYPES OF CHEQUES
1.OPEN CHEQUE
2.CROSSED CHEQUE
OPEN CHEQUE:
An open cheque is one which is payable across the counter of the bank. It need not be paid
through a bank. It can be encashed at the counter of the bank. An open cheque can further be of
two types:
a. BEARER CHEQUE:
When a cheque is payable to a person named in the cheque or to the bearer thereof, it is called a
bearer cheque.
For e.g.
pay to Rakesh Kumar Garg or bearer.
Such a cheque may be paid to Rakesh Kumar Garg at the counter of the bank when he presents it
for payment. Mr. Rakesh Kumar Garg can either himself go to bank for getting payment or simply
he may or may not sign at the back side of the cheque and hand it over to any person. Any person
can go to the bank and collect its payment. The drawee bank need not take any pains to get the
identification of the person to whom the payment to whom the payment is being made. A bearercheque is transferable merely by delivery.
b. ORDER CHEQUE:
An order cheque is payable to the person named in the cheque or his order.
For e.g.
pay to Rakesh Kumar Garg or order.
Such a cheque is payable to either Rakesh Kumar Garg or to any person whom he orders the
payment of the cheque. Order cheque is paid by the bank only when the bank is satisfied about
the identity of the payee. An order cheque is not transferable merely by delivery. It cannot be
transferred without the signatures of the transferor.
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CROSSED CHEQUE:
A crossed cheque is one on which two parallel transverse lines with or without the word & co.
not negotiableetc. are drawn. A crossed cheque is not payable across the counter of the bank.
It must be collected through a bank. It is paid into the bank account of a person and cannot be
encashed at the counter of the bank. By crossing cheques safety is ensured and the person to
whom payment is eventually made can be traced because such a cheque is always paid into a bank
account. A crossed cheque provides protection not only to the holder of the cheque but also to thereceiving and collecting bankers.
Types of Crossing
a) General Crossing
b) Special Crossing
Other Types of Crossing
1. Restrictive Crossing
2. Not Negotiable Crossing
3. Double Crossing
Passbook:
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A bank statement is a summary of all financial transactions occurring over a given period of time on a
deposit account.
A passbook is a paper book used to record transaction on a deposit account.
If the deposit account has no passbook such as a checkable account or credit card account, the bank
will issue statement for you in a given time period.If the deposit has a passbook, the book is
statement.
BANK DRAFT:
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Bank draft is a bill drawn either on demand or otherwise by one banker on another in favour of a
third party or by one branch of a bank on another branch of the same bank or by the head office
of a branch or vice versa for a sum of money payable on demand or order. It is also known as
demand drafts as they are always payable on demand without any days of grace and there cannot
be any bearer drafts.
They are always used as a mode of remittance by parties for sending money from one place to
another. For the preparation of this draft bank charges a nominal commission for this service.
Demand Draft:
DIFFERENCE BETWEEN CHEQUE AND DEMAND DRAFT
DEMAND DRAFT It cannot be
made payable to
bearer.
Its payment
cannot be
stopped.
It is drawn
by a bank upon
itself.
CHEQUE It may be drawn
payable to bearer.
It is
countermanded asin case of a
cheque.
A cheque is drawn
by one person upon
another
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DEBIT NOTE
It is a document evidencing that a debit to be raised against a party for other reasons, for e.g.,
when goods are returned to a supplier or when an additional amount is recoverable from acustomer.
CREDIT NOTE
It is made out when a party is to be given a credit except against the bill already received from it.
When goods are received back from a customer, a proper credit note should be given to him.
VOUCHER
It is a document providing evidence of some business transaction. It is clear from the above
definition that whenever a transaction takes place, an evidence to that effect is also established
Types of vouchers:
a. Source vouchers
b. Accounting vouchers
CHEQUE CROSSING
MEANING
The act of drawing two parallel transverse lines on the face of a cheque is called crossing of a
cheque. It is a direction to the banker not to pay the cheque across the counter of the bank but to
pay to a bank only or to particular bank in account with the bank.
The amount in this cheque is paid into the bank account of the respective person whose name is
being mentioned on the cheque.
Types of crossing:
a) General crossing
b) Specific crossing
GENERAL CROSSING
General crossing implies simply putting two parallel transverse lines on the face of cheque.
According to section 123 of the negotiable instruments act, 1881 says, where a cheque bears
across its face an addition of the words and company, or any abbreviation thereof; between two
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parallel lines or just two lines without any negotiation will be considered a generally crossed
cheque.The effect of general crossing is that payment of such a cheque cannot be obtained at the
counter of the bank, it can only be obtained through a banker.
SPECIAL CROSSING
A special crossing implies a direction written on the face of a cheque to pay the cheque only if it is
presented through a particular bank mentioned therein. the cheque is deemed to be crossed
specially. In this the amount is transferred to the mentioned name a/c.
RESTRICTIVE CROSSING:
It constitute a direction to the collecting banker to collect the cheque and credit the proceeds to the
account of the payee only. Such a crossing is known as RESTRICTIVE CROSSING. The collecting bank
has to credit the account of the payee in whose favour the cheque is drawn.
NOT NEGOTIABLE CROSSING:
It makes the cheque non transferable but the effect of such a crossing is that when the holder to a
cheque transfers it to any other person the transferee does not get a better title than the transferor
had even though the transferee is a bonafide person who takes the instrument for a valid
consideration and before the maturity of the instrument.
DOUBLE CROSSING:
PERSONS WHO MAY CROSS A CHEQUE:
A cheque may be crossed by any of the following:
1. The drawee of the cheque
2. The holder of the cheque
3. The collecting banker
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