ZIMSEC O Level · Commerce · Form 3
Order of documents in a transaction
- Letter of enquiry (buyer asks about goods, prices and terms).
- Quotation or price list (seller replies).
- Order (buyer requests goods).
- Advice note and delivery note (goods sent and received).
- Invoice (bill showing amount owed, trade discount, terms).
- Debit note (buyer claims an undercharge correction) or credit note (seller reduces the amount owed).
- Statement of account (summary at month end).
- Payment (cash, cheque, transfer, mobile money) and receipt.
Terms
- Trade discount: reduction for buying in large amounts or for resale.
- Cash discount: reduction for paying quickly.
- C.W.O. (cash with order); C.O.D. (cash on delivery); E. & O.E. (errors and omissions excepted); carriage paid / carriage forward.
Worked example: Goods listed at US$800 are sold with 10% trade discount and 5% cash discount for payment within 7 days. Find the amount paid promptly.
Trade discount: 800 × 10% = 80 → invoice 720
Cash discount: 720 × 5% = 36 → paid 684
Exam tip: Trade discount is deducted on the invoice first; cash discount only on payment.
Check yourself
- Which document is sent by the seller to reduce the amount owed?
- What does E. & O.E. mean?
- Goods priced at US$500 carry 20% trade discount. Find the invoice amount.
Show answers
- A credit note.
- Errors and omissions excepted – the seller can correct mistakes later.
- US$400
Questions about this topic (0)
No questions about this topic yet.
Sign in or create a free account to join in.