|Provides the evidence that a transaction has actually taken place||Source Document|
|Generated outside the business or created by the business to send out||External Source Document|
|Generated within the business and retained within the business||Internal Source Document|
|Used when a customer has returned goods purchased or been overcharged on their original purchase||Credit Note|
|Summary of invoices and credit notes issued to the customer and payments received from the customer||Statement|
|May be prepared when money is received by the business||Receipt|
|Purchaser issues this to a supplier listing what goods they want to order||Purchase Order|
|Details what the customer has purchased including date, description and quantity.||Invoice|
|An invoice which meets the extra requirements when a business is registered for GST||Tax Invoice|
|Shows details about a cheque written including date, person or business being paid, reason for payment and amount||Cheque Butt|
|Shows details of who is making a payment and what they are making the payment for||Remittance Advice|
|Also known as creditors||Accounts Payable|
|amounts our business owes someone else||Accounts Payable|
|also known as Debtors||Accounts Receivable|
|amounts someone owes our business||Accounts Receivable|
|resources controlled by our business as a result of past events||Assets|
|an amount owed to us which is uncollectable and is written off||Bad Debt|
|also known as Fixed Assets||Non-Current Assets|
|are assets of permanent nature required for the normal conduct of a business and which aren’t intended for resale as part of the business operations||Non-Current Assets|
|Goods and Services Tax of 15%||GST|
|raw materials, work in progress and goods held for resale by the business||Inventory|
|also known as Stock||Inventory|
|a loan or any other amount of money owed to someone else||Liabilities|
|the amount added to the cost of the goods to make a profit for the business||Mark up|
|the difference between the income and expenses of a business||Net Profit|
|also known as net income or net surplus||Net Profit|
|business entity owned by more than 1 person||Partnership|
|someone who owns shares in a company||Shareholder|
|business owned by 1 person||Sole Trader|
Business A prepares a purchase order which it sends to Business B.
Business B receives the purchase order from Business A, locates the goods and packages them up to send to Business B. Business B also prepares an invoice which they may use as a packing slip as well. The invoice could be sent with the goods or sent at a later date to Business A.
When Business A receives the invoice and goods they will compare what has been sent is what they ordered by comparing them to the purchase order copy they kept.
When Business A confirms they have received what they ordered, they will pay the invoice using a cheque or paying online. They may also send back a remittance advice so business B knows who the payment comes from.
When business B receives the payment from Business A they may issue a receipt.
Business B will bank any cheques/payments they have received into their bank account.
If Business A has not paid by the end of the month, Business B may send a statement which shows the amount still owing by Business A.
Sometimes Business B may issue a credit note if the items sent to Business A are damaged or missing to reduce the amount Business A owes to Business B.
Here are some very useful links to Inland Revenue’s website resources:
- Inland Revenue
- IR320 Smart Business
- IR335 Employers Guide
- IR1010 Business Support in NZ
- IR1022 Online Trading
- IR375GST Guide
- Internet Tax Guide
- Making payments to Inland Revenue IR584
Now reflecting on the importance of understanding business terminology and document flow for IT professionals in the industry from what I have learnt I can see it having a great importance. Now I’m not saying that IT professionals need to know everything about these business systems but a basic knowledge will go a long way. These systems are used everywhere and for an IT professional that is designing a program that deals with these systems and documents a basic knowledge will be essential but for let’s say a game designer it will be less essential, but useful when it comes to understanding the business you work for. In the case of a Network engineer it could come in very useful. This is because they are put in charge of ordering the required parts for the network and a lot of these documents will be needed for this, as shown above. I thinks it depends on what part of the industry you work in will determine how much knowledge you will need. This basic knowledge will also help an IT professional understand how they are getting paid and then will have some understanding on a way to fix a problem they may have.