CHAPTER I

BACKGROUND
Selling is the process of selling merchandise or company products, resulting in sales
transactions. Sales accounting system is a system used by companies to sell merchandise or
products in accordance with good accounting procedures.

Many middle and upper companies use this system in running their business in the
company's sales department. This system aims to assist the administration of the company in
sales transactions that occur. so the company can easily determine the buyer who has a debt
and a certain due date.

This report is presented as follows: Chapter I describes the background of the study, the
purpose of the study and report's organization. Discussion and data presentation is on Chapter
II with some sections. The report is closed by presenting conclusion and suggeestion in
Chapter III.

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 CHAPTER II

DISCUSSION

A. The Importance of Sales Invoice in Financial Accounting

In financial accounting, a sales invoice (or invoice) is a document used by a company to
communicate to clients about the sums that are due in exchange for goods and services that
have been sold. Invoices help businesses get paid and provide legal protection for both sellers
and buyers. As a service or product provider, you need to prepare a sales invoice whenever
you need to request payment from your customer. Usually, invoices are sent twice; before the
customer’s request is processed and after the request is fulfilled. However, some sellers
prefer to send their invoices either at the beginning or the end of the transaction, depending
on the payment policies applied in their companies.

Types of Sales Invoices

a. Standard Invoice

A standard invoice is the simplest

type of invoice. It can be applied in
any sale transaction. It should
include the reference number,
delivery date, due date, seller’s
name, contact information, list of
products or services transacted,
total price, and method of payment.

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 b. Pro-forma Invoice

A pro-forma invoice is submitted by a

seller to a buyer before the goods or
services are delivered to the buyer.
The purpose of a pro-forma invoice is
not to ask for payment right away, but
to inform the buyer or the customer
about the fee that must be paid after
they receive the products or services
they ordered.

c. Recurring Invoice

Recurring invoices are used by

suppliers or merchants to charge
customers for goods or services at
regular intervals. These invoices are
normally submitted on a monthly
basis and popularly used by service
providers who have regular
customers, such as internet service,
TV, and telecommunications service
providers. With the help of EQUIP
E-Invoicing, recurring invoices can
be created and scheduled instantly.

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 d. Commercial Invoice

Unlike the daily invoices that we usually

encounter, commercial invoices are special
invoices designed for documentation in
international trade, such as shipping
machine parts from one country to another.
These invoices are used for customs
valuation when products cross
international borders.

The Components of a Successful Invoice

a) Company Information

Company’s legal name, logo and address must be included in the invoice.

b) Customer Information

Customer’s name that matches their identity card must be written completely.

c) Invoice Number

Invoice number has to be included in an invoice to distinguish one transaction from

another.

d) Invoice Date

This part shows the date when the invoice is sent, so merchants can record their daily
journals based on their sales invoices.

e) Transaction Details

A detailed description of the goods or services listed, consisting of quantities, codes and
names of goods or services, as well as unit prices, discounts, and total prices.

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 f) Total Amount Due

The total amount due includes the subtotal price of each product, the taxes collected, and
the total price that the customer must pay.

g) Payment Terms

Last but not least, a sales invoice must also cover the terms and conditions of payment
that must be met by customers, including the due date and payment method.

The Purpose of Sales Invoice

- As a written evidence related to the quantity and price of goods

- As information regarding the value of bills that must be paid by customers

- As proof that the taxable goods received by a customer are in accordance with their
requests and the customer can use the invoice to file a complaint

- As a reference document when the goods or services listed will be sold to other parties

- As a tool to track what has been sold, when the transaction has taken place, and how
much money is involved

- As a valid evidence for tax reporting

B. How to Determine The Output Tax in Sales Transactions

A basic concept that require clear understanding is that almost every seller is also a
buyer of goods and/or services.For example, on sales of goods and services subject to tax,
Entity A is liable to pay sales tax. Sales tax on goods sold is also called output tax. As it is an
indirect tax, the charge is shifted to next buyer by adding the relevant tax amount in the price
of goods/services sold.

Sales tax payable is calculated using the formula:

Sales tax = Sales tax collected on goods sold – Sales tax paid on goods purchased

Accounting for Output tax

Sales are always recorded exclusive of tax in entity’s accounting books and sales tax on
such sales is recorded as liability. One important thing to remember is that cash received or
receivables are always recorded inclusive of tax. Once the sales tax amount is determined
using tax rate or tax fraction. The complete journal entry is following:

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Cash/Bank/Receivables a/c XXX

Sales a/c XXX

Sales tax a/c XXX

Example: Accounting for Output tax

Izmis Ltd. made a fortune last year by selling 2 million units of candies named “caves”. Total
sales were 240,000 inclusive of tax. Tax rate applicable was 20%. All sales were made on
credit.

Give the journal entry to record above sales and related sales tax.

Solution:

Sales are inclusive of tax therefore, tax fraction will be applied: 20/120

= 240,000 x 20/120 = 40,000

Receivables a/c 240.000

Sales a/c 200.000

Sales tax a/c 40.000

C. Dokuments in a Sales Transaction and Benefits

• Invoice

1. Get Immediate Access To Cash Without Needing A Loan

2. Only Make Repayments When The Money Comes In

3. Feel Better About Big Project

4. Business Growth

5. Choose How Much Money You Need, And How Often

6. You Can Apply For Invoice Finance In Hours

7. Reduce the Risk of Late Payments and Bad Debts

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 • Purchase Order

1. Avoids duplicate orders

2. Keeps track of incoming orders

3. Serves as legal documents

• Delivery Order

1. Give clarity and be sent to goods to be sent

2. As a form of formality or official statement from certain parties

3. Facilitate our business towards bureaucracy

4. As confirmation that the item has been received

5. The first sheet is used as a valid proof of the transaction received by the recipient of
the goods needed, the first sheet will be used for accounting in the accounting department

6. The second sheet is given to the recipient of goods or buyers

7. Then the last sheet will be used as an archive for the company that was issued

D. Kind of Payment Terms

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E. Duplicate Sales Documents
• Sales function. In a credit card sales system, the sales function is responsible for
serving the customer's needs for goods. The sales function fills out credit card sales invoices
to allow the warehouse function and the shipping function carry out delivery of goods to
customers.

• Warehouse Function. In this sales system, the warehouse function provides goods
needed by customers in accordance with what is stated in the copy of the credit card sales
invoice received from the sales function.

• Delivery function. This function is responsible for delivering goods whose quantity,
quality, and specifications are as stated in the copy of the credit card sales invoice received
from the sales function. This function is also responsible for obtaining signatures from
customers on credit card sales invoices as proof of receipt of goods purchased by the
customer.

• Accounting Function. This function is responsible for recording the increase in

accounts receivable transactions to the customer on the credit card based on the credit card
sales invoice received from the shipping function. In addition, the accounting function is
responsible for recording sales transactions in the sales journal.

• Billing Function. This function is responsible for making invoices periodically to credit
card holders. In the organizational structure in Figure 7.1 the billing function is in the hands
of the Billing Section.

Information Required by Management

• The information required by management of the sales transaction with a credit card is:

• The amount of sales revenue by product type or product group over a certain period of time.

• The amount of credit to each debtor from the credit sale transaction.

• The total cost of the product sold during a certain period.

• Buyer's name and address.

• Quantity of products sold.

• The name of the salesperson who made the sale.

• Authorize authorized officials.

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 CHAPTER III

CONCLUSION
Based on the discussion in the previous section can be made the following conclusion:

- The importance of companies in carrying out operational activities of the company by using
a sales accounting system in accordance with accounting procedures.

- Companies that use this system are usually large companies that are advanced and
successful, but not infrequently also medium companies that also use this system

- All operational activities carried out by the company have a coherent stage and must be
obeyed in accordance with the regulations set by the company

My advice when you do an activity on the company should have good guidelines and
rules so that the company's operational activities run well and the company's sales
administration is also organized and not chaotic. Before using the necessary procedures the
company must also discuss what are the contents and intent of the sales accounting system so
that misunderstandings occur and have mastered their knowledge.

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 REFERENCES

https://en.m.wikipedia.org/wiki/Sales_(accounting)

https://www.hashmicro.com/blog/sales-invoice-definition-purpose/

https://pakaccountants.com/courses/taxation/sales-tax/

https://www.timfinance.com.au/invoice-finance/benefits-of-invoice-finance/

https://corporatefinanceinstitute.com/resources/knowledge/other/purchase-order/

https://airspeed.ph/blog/benefit-deliveryorder-ecommerce/

https://www.nibusinessinfo.co.uk/content/payment-terms-commonly-used-invoice-payment-
terms-and-their-meanings

https://sites.google.com/site/spkngolive2017/sistem-akuntansi/piutang/penjualan-kredit?
tmpl=%2Fsystem%2Fapp%2Ftemplates%2Fprint%2F&showPrintDialog=1

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