Practice Questions
Practice Questions: Business Documents as a Source of Information
This set tests your understanding of the functions of source and non-source documents, the flow of documents between buyer and seller, and the calculation of trade and cash discounts. All businesses are fictional and for practice only.
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How to practise effectively
- Read each transaction and identify whether it is cash or credit before choosing the correct document.
- For discounts, remember the order: trade discount is calculated first on the list price, then cash discount is calculated on the net amount after trade discount.
- Write out the formula before inserting numbers so that every step of the calculation is clear and easy to check.
- Match each document to the party that issues it: the seller, buyer, receiver of money or bank.
- Check your full answers against the worked-example sets when complete accounts are needed; this set focuses on document functions and discount calculations.
Avoid common mistakes
- Do not calculate cash discount on the list price; it must be calculated on the amount after trade discount is deducted.
- Do not confuse their functions: trade discount encourages bulk buying, while cash discount encourages prompt payment.
- Do not misidentify the issuer of a document; for example, a receipt is issued by the party receiving the money, not the one paying.
- Do not treat the Statement of Account and Bank Statement as source documents; both are non-source documents that only summarise information.
| Document | Issued by | Brief purpose |
|---|---|---|
| Cash Bill | Seller | Evidence of a cash sale/purchase |
| Receipt | Receiver of money | Evidence that money was received |
| Payment Voucher | Payer | Approves and records a payment |
| Debit Note | Seller | Increases the amount charged due to an undercharge |
| Credit Note | Seller | Reduces the amount charged due to returns or an overcharge |
Practice Questions
Question 1
Bestari Stationery sells goods for cash to a customer. The list price of the goods is RM800 with a 10% trade discount. (a) State the source document issued. (b) Calculate the net amount payable.
Answer
(a) Document: Cash Bill (issued by the seller for a cash sale).
(b) Trade discount = 10% x RM800 = RM80
Net amount = RM800 - RM80 = RM720
Question 2
Delima Bakery sells goods on credit to Maju Retail Store. The list price is RM2,000 with a 15% trade discount. Maju Retail Store later settles the debt within the stated period and receives a 4% cash discount. Calculate (a) the net amount after trade discount, (b) the cash discount, and (c) the final payment.
Answer
(a) Trade discount = 15% x RM2,000 = RM300
Net amount = RM2,000 - RM300 = RM1,700
(b) Cash discount = 4% x RM1,700 = RM68
(c) Final payment = RM1,700 - RM68 = RM1,632
Question 3
Classify the following as source or non-source documents, and state one difference between the two types: Receipt, Statement of Account, Payment Voucher, Bank Statement, Petty Cash Voucher, Memo.
Answer
Source documents: Receipt, Payment Voucher, Petty Cash Voucher, Memo.
Non-source documents: Statement of Account, Bank Statement.
Difference: A source document is the original evidence used as the basis for recording a transaction, whereas a non-source document only summarises or verifies information and is not used to make records.
Question 4
State the most suitable source document for each of the following transactions: (a) Paying an electricity bill by cheque. (b) Buying stamps using petty cash. (c) Banking cash sales into the bank account. (d) The owner takes goods for personal use (drawings).
Answer
(a) Cheque Counterfoil / Payment Voucher.
(b) Petty Cash Voucher.
(c) Bank Slip / Deposit Slip.
(d) Memo.
Question 5
The documents for a credit transaction between a buyer and seller are given in random order: Invoice, Purchase Order, Quotation, Statement of Account, Letter of Enquiry. Arrange them in the correct flow, from the buyer's enquiry to the seller sending a summary of the debt.
Answer
Correct order:
1. Letter of Enquiry (buyer asks about price)
2. Quotation (seller states the price)
3. Purchase Order (buyer places the order)
4. Invoice (seller delivers goods and charges)
5. Statement of Account (seller sends a summary of the debt)
Question 6
Seri Wangi Furniture sells tables to Cahaya Furniture Store on credit. Two situations occur: (a) Some tables are faulty and returned by the buyer. (b) The seller mistakenly charged less than the actual price. State the source document issued by the seller in each case and briefly explain its function.
Answer
(a) Credit Note, issued by the seller to reduce the amount owed by the buyer because goods were returned.
(b) Debit Note, issued by the seller to increase the amount owed by the buyer due to an undercharge.
Question 7
Explain the meaning of the Statement of Account and the Bank Statement, and state one key difference between them.
Answer
Statement of Account: a document sent by the seller (creditor) to the buyer (debtor) that summarises transactions such as invoices, payments and returns for a period and shows the balance still owing.
Bank Statement: a document issued by the bank to the account holder showing all deposits, withdrawals and the account balance for a period.
Difference: The Statement of Account is issued by the seller/business, whereas the Bank Statement is issued by the bank.
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