Chapter 7: Prepare payments to suppliers Flashcards Preview

AAT (L2): FINAL Chapter Summary > Chapter 7: Prepare payments to suppliers > Flashcards

Flashcards in Chapter 7: Prepare payments to suppliers Deck (6)
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1
Q

When is a business ordering goods ready to settle up the supplier’s account in the purchases ledger?

A

When it has checked all the financial documents:

  • Invoice
  • Delivery Note
  • Credit Note
2
Q

What is a common practice for a supplier to send each customer?

A

Sending a statement of account to each customer

Listing all the transactions
(Sales, Returns, Payments)

Which will then be recorded in the Purchases Ledger Account.

3
Q

Reconcilliation?

A

The process where the customer checks that the items on the supplier’s statement of account.

“Tie Up”

With the items in the supplier’s account in the purchases ledger.

4
Q

What must be done with any discrepancies between the supplier’s statement of account and the purchases ledger?

A

They must be identified and investigated.

They will affect the amount of money that will be paid to the supplier.

5
Q

How is payment of the buyer’s account made?

A

The amount is calculated by totaling authorised invoices due for payment

& deducting any authorised credit notes & discrepancies that have been found.

6
Q

How is payment on the due date advised to the supplier?

A

By completing and sending a remittance advice.

Either with a cheque, or with details of a BACS payment made direct to the bank account of the supplier.