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Topic 3 of 7 · Form 3

Consumer protection and documents of trade

Reasons (complex products, misleading advertising, unsafe goods, weights and measures); methods: legislation (fair trading, sale of goods, trade descriptions, food safety), government agencies, consumer associations, trade associations' codes of practice, the media.

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Consumer protection

Reasons (complex products, misleading advertising, unsafe goods, weights and measures); methods: legislation (fair trading, sale of goods, trade descriptions, food safety), government agencies, consumer associations, trade associations' codes of practice, the media.

Documents used in trade

Enquiry, quotation/price list/catalogue, order, advice note, delivery note, invoice, debit note, credit note, statement of account, receipt.

Terms of trade

Trade discount (for trade customers and bulk orders), cash discount (for prompt payment); terms: CWO (cash with order), COD (cash on delivery), E&OE (errors and omissions excepted), carriage paid and carriage forward.

Worked example: Goods listed at US$1 000 have 20% trade discount and 5% cash discount if paid within 14 days. Find the invoice amount and the amount paid within 14 days.

Invoice = 1 000 × 0.80 = US$800; paid = 800 × 0.95 = US$760

Methods of payment

Cash, cheques, bank transfers, standing orders, direct debits, debit and credit cards, mobile money and online payments.

Exam tip: Credit notes reduce the amount owed; debit notes ask for it to be reduced (or correct an undercharge).

Check yourself

  1. Which document shows what a buyer owes at the end of the month?
  2. What does COD mean?
  3. Give one advantage of a direct debit for a business receiving regular payments.
Show answers
  1. The statement of account.
  2. Cash on delivery.
  3. Payments are collected automatically on time, improving cash flow and reducing collection costs.
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