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Hello,
How does the REAL world work? The Starting Point?
For Example
1) Company X wants to buy some books from Company D .
Who raises the invoice?
What is it a Sales invoice or a Purchase invoice? Or Purchase order etc??
In real life what happens? Like the ACTUAL Cycle?
and Vice versa if we sell something to company D
Thank You very much
The real world is the same as the exam world in this respect 🙂
If X wishes to buy goods from D, they will order them from D (and might send to D a purchase order on paper – but this is not recorded in the accounts).
When D supplies the goods, D issues an invoice. It is always the seller who prepares the invoice.
Now then…….as far as D is concerned it is a ‘sales invoice’ and it will have ‘sales invoice’ typed on it (and D will record it in their accounts as a sale).However when X receives it, they will call it a Purchase invoice (and will file it in a file called purchase invoices), because they have purchased goods. They will record it in their accounts as a purchase.
(If we sell something to D, then it is exactly the same as above, but changing D and X round 🙂 )
Hope that makes sense 🙂
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