AAT_L2_ITB_Chapter 1_Activity 1_Accounting Terminologies

Recording of business's financial transactions.

• Budgeting
• Financial tracking
• Bookkeeping
• Accounting

Answer explanation

Accounting is the process of recording all financial transactions made by the business. Accounting is the "lifeblood of the business".

A statement from supplier or seller advising the customer or buyer about the price of a good or service.

• Quotation

• Delivery Note

• Credit Note

• Invoice

Answer explanation

A quotation is a written statement sent from seller to buyer advising the buyer about the price of a specific good or service.

An official statement from a financial institution given to an account holder to detail all transactions occurring over a specific time period.

• Credit Note

• Invoice

• Customer Order

• Bank statement

Answer explanation

BANK STATEMENT is an official summary of financial transactions occurring within a given period of time for each bank account held by a person or business with a financial institution.

Business document issued to a customer who returns goods, showing the details of the goods returned and their value.

• Invoice

• Delivery Note

• Credit Note

• Remittance Advice Note

Answer explanation

CREDIT NOTE is a document issued by the seller to the buyer to indicate a return of funds in the event of an invoice error, incorrect or damaged products or purchase cancellation.

CREDIT NOTE decreases the amount stated in the original invoice.

A request by a customer to purchase a specific quantity of goods or service from an individual or organisation.

• Delivery Note

• Customer Order

• Remittance Advice Note

• Bank Statement

Answer explanation

CUSTOMER ORDER or PURCHASE ORDER is a business document prepared by the buyer to purchase good or service from seller on agreed terms, specifications and conditions.

A type of transaction which the sale and the payment happen at the same time.

• Cash Transaction

• Credit Transaction

Answer explanation

CASH TRANSACTION is when cash is exchanged for goods or services at the time of purchase.

A type of transaction which the seller provides the buyer with the goods or services, but no payment is made at that time.

• Cash Transaction

• Credit Transaction

Answer explanation

CREDIT TRANSACTION is when the buyer receives goods or services in exchange of future payment.

Shows the goods or services provided to a customer with a statement of the amount required to be paid.

• Delivery Note

• Invoice

• Remittance Advice Note

• Credit Note

Answer explanation

INVOICE is a business document prepared by the seller relating to a credit transaction and indicating the products or services provided and agreed upon prices.

A document sent with a payment setting out which amounts are being paid and whether any credit notes are being applied.

• Invoice

• Remittance Advice Note

• Bank Statement

• Credit Note

Answer explanation

REMITTANCE ADVICE NOTE is prepared by the buyer as a proof of payment letter to seller that verifies buyer's payment and sent together with the cheque.

A business document that accompanies the shipment of goods.

• Invoice

• Credit Note

• Remittance Advice note

• Delivery Note

Answer explanation

DELIVERY NOTE is a business document that provides a list of the products and quantity of the goods included in the delivery. Also known as DISPATCH NOTE.