Definition
A document that itemizes the transfer of goods or services between a buyer and seller is known as an invoice. Information appearing on an invoice includes the names of the buyer and seller, price paid, quantities, and date of the transaction.
Explanation
Since an invoice serves to document the transfer of goods or services from the seller to buyer, it can be used by accountants to record the transaction. Payment terms are usually negotiated between a buyer and seller by procurement or supply chain associates. When the terms include the extension of credit, an invoice normally results in an increase in accounts payable on the balance sheet of the buyer and a corresponding increase to accounts receivable on the seller's books.
The information typically appearing on an invoice includes:
Invoice Number
Purchase Order Number
Contact Details of Buyer and Seller
Date of Transaction
Payment Terms
Quantity Purchased
Price per Unit
Sales Tax (if applicable)
Total Amount Due
Related Terms
Also known as a statement of financial position, the balance sheet is used to show the financial health of a company at a particular point in time. The balance sheet consists of assets, liabilities, and owner's equity in the company. It is one of the four key financial statements issued by public companies.
Moneyzine EditorNovember 6th, 2024
Also referred to as "payables," this is the accounting term used to describe balances owed to trade partners for materials, supplies, goods and services that were purchased on credit. Accounts payable recognizes the timing difference between the company's receipt of the benefit or asset, and the payment for this expense.Moneyzine EditorNovember 6th, 2024
Also referred to as "receivables," this is the accounting term used to describe claims the company has against others for goods, services, or money. Accounts receivable are usually non-written promises to pay for goods or services received but not yet paid for by a customer.Moneyzine EditorNovember 6th, 2024
