Page 1 - Chapter 2

Chapter 2

Selling Goods and Services

In this chapter we will be looking at the process of selling goods or services. We
will look at some of the documents used when making a sale.

We will look at the calculation of invoice totals along with any discounts offered.

We will see how VAT is calculated when dealing with customers.

T
he primary function of any commercial business is to sell goods or services with the
intention of making a profit.

Documents involved in making a sale

Before you can sell anything, your customers will need to know how much you are selling
the goods or services for. You will need a price list, a catalogue or you may advertise the
price on the actual goods. Some businesses cannot give a standard price, as goods and
services will vary from sale to sale. Typical examples are builders and decorators. In these
cases the seller will provide an estimate or a quote.

In legal terms there is a lot of difference between an estimate and a quote. An estimate is a
rough idea based on guess‐work as to how much the job will cost the customer. However,
the amount stated is not binding and the price may change according to different
circumstances which the supplier may come across. A quote, on the other hand cannot be
changed once it has been accepted by the customer. It is possible, though, to state exactly
what the quote is for and that additional charges may be incurred if certain unexpected
circumstances occur.

An example of a quotation is shown on the next page.

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