Trading documents

Revise Trading documents for Commerce 7100 (O Level) — revision notes, 92 practice questions and instant AI marking.

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Cambridge O Level Commerce 7100

Trading Documents

The big idea: Every sale between businesses leaves a paper (or digital) trail: the buyer asks, the seller quotes, the buyer orders, the goods arrive with a delivery note, the bill follows as an invoice, mistakes are put right with a credit note, and a monthly statement shows what is still owed. International trade adds documents that prove where goods came from, who owns them and that the seller will be paid.

Summary — What This Chapter Covers

Home trade documents in order: enquiry → quotation → order → delivery note → invoice → credit note (if needed) → statement of account → receipt.
A trade discount is a reduction for traders buying to resell, deducted on the invoice. A cash discount is a reduction for paying quickly (“5% 30 days”), taken off the amount after trade discount.
A credit note reduces what the buyer owes; a statement of account shows the running balance for the month.
International trade documents: certificate of origin, bill of lading (sea), air waybill (air) and documentary credit (letter of credit).
The online ordering process runs from the buyer browsing a website to receiving the order.
Digital technology in trading documents: digital signatures, secure access, cloud-based storage, electronic receipts and etickets.

1. Documents of Home Trade

Syllabus 2.5.1 · Papers 1 & 2

Who sends what, and why

Each document has a sender, a receiver and a purpose. Exam questions often name a situation (“goods arrive damaged”, “the retailer wants to know prices”) and ask which document is used, so learn the purpose of each one.

Document	Sent by → to	Purpose and main contents
Enquiry	Buyer → seller	Asks for information about goods: prices, availability, delivery times and terms. Often sent to several suppliers.
Quotation	Seller → buyer	Replies to the enquiry: description of goods, prices, trade discount, cash discount terms, delivery date and charges, how long the prices are held.
Order	Buyer → seller	Formally requests the goods: order number, description, quantity, price agreed, delivery address.
Delivery note	Seller → buyer (with the goods)	Lists the goods delivered but no prices. The buyer checks the goods and signs a copy as proof of delivery.
Invoice	Seller → buyer	The bill: invoice number, date, goods, quantities, unit prices, total, trade discount, amount due and terms of payment.
Credit note	Seller → buyer	Reduces the amount the buyer owes: for goods returned, damaged or missing goods, or an overcharge on the invoice.
Statement of account	Seller → buyer (usually monthly)	Summarises the month’s invoices, credit notes and payments and shows the balance still owed. Reminds the buyer to pay.
Receipt	Seller → buyer	Proof that payment has been made.

Definition · Trade discount A percentage reduction in the list price given by one trader to another (for example a wholesaler to a retailer) so that the buyer can resell at a profit; often larger for bulk orders. It is deducted on the invoice.

Definition · Cash discount A percentage reduction given to encourage prompt payment, for example “5% 30 days”: 5% may be deducted if the invoice is paid within 30 days. It is calculated on the amount after trade discount.

Worked example: an invoice with both discounts

2. Documents of International Trade

Syllabus 2.5.2 · Papers 1 & 2

Proving origin, ownership and payment

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Trading documents