BuildPro Hardware supplies monthly materials to a small construction firm under 30-day credit terms. BuildProInvoiceBuilder© EAGLE BEACON GLOBAL (a) Describ...
Question 1 Report
BuildPro Hardware supplies monthly materials to a small construction firm under 30-day credit terms.
(a) Describe what is meant by an invoice. [2]
(b) Describe what is meant by credit terms. [2]
(c) Explain why BuildPro sends an invoice with its materials. [2]
(d) Explain why the construction firm may value 30-day credit. [2]
(e) Outline three items usually shown on an invoice. [3]
(f) Explain three ways a supplier can encourage prompt payment. [3]
(g) Account for why a customer may dispute an invoice. [3]
(h) Explain three records BuildPro should keep about credit customers. [3]
Answer Details
(a) An invoice is a document requesting payment for goods or services supplied; it states the amount owed. [2]
(b) Credit terms are an agreement allowing a buyer to pay after receiving goods, stating the payment period, such as 30 days. [2]
(c) BuildPro sends an invoice to record the materials supplied and amount due, giving the construction firm the information needed to make payment. [2]
(d) Thirty-day credit allows the firm to use the materials before paying and wait for income from its construction work. [2]
(e) Typical invoice items are the invoice number and date, description and quantity of goods, and total amount due with the due date. [3]
(f) A supplier can state a clear due date, send payment reminders, and offer an early-payment discount or charge interest on overdue sums. [3]
(g) A customer may dispute an invoice if the delivered quantity differs, goods are damaged or missing, or the price does not match the agreed price. [3]
(h) BuildPro should keep customer contact details, records of invoices issued and outstanding amounts, and payment dates and credit limits. [3]
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