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Invoice

Moneyzine Editor
Author: 
Moneyzine Editor
1 mins
January 23rd, 2024
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Invoice

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

Balance Sheet
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.
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Accounts Payable
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.
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Accounts Receivable (Receivables)
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.
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