Invoice, Mercentile Agents and Account Sale Objective Type Questions (1 Mark)

Question 1.
Invoice is a statement of goods prepared by the:
(a) Buyer
(b) Customer
(c) Seller
(d) None of these
Answer:
(c) Seller

Question 2.
The invoice is the final evidence of:
(a) Purchase
(b) Sale
(c) Goods
(d) None of these
Answer:
(b) Sale

3. The expenses mentioned in the proforma invoice are:
(a) Actual
(b) Estimated
(c) Either (a) or ( b)
(d) None of these
Answer:
(b) Estimated

Question 4.
When the seller quotes any price for the goods, the price is for the goods to be delivered of the godown of the ………..
(a) buyer
(b) customer
(c) seller
(d) None of these
Answer:
(c) seller

Question 5.
Amount payable is that amount which the buyer has to pay to the seller for the goods ……
(a) Sold
(b) Purchased
(c) Either (a) or (b)
(d) None of these
Answer:
(b) Purchased

Question 6.
The statement which the selling agent prepares and submits to his principal is called:
(a) Invoice
(b) Account Sales
(c) Sales Letter
(d) None of these
Answer:
(b) Account Sales

Question 7.
Purchase agents appointed to purchase goods on behalf of their …….
(a) Agent
(b) Customer
(c) Principal
(d) None of these
Answer:
(c) Principal

Question 8.
A broker is an agent employed to negotiate for the sale and purchase of ……..
(a) Car
(b) Building
(c) Goodwill
(d) Goods
Answer:
(d) Goods

Question 9.
When an agent is appointed for accomplishing any particular or special job, he is known as ………
(a) General Agent
(b) Local Agent
(c) Special Agent
(d) None of these
Answer:
(c) Special Agent

Question 10.
The principal is responsible for all the deeds of the general agent:
(a) Local Agent
(b) General Agent
(c) Special Agent
(d) None of these
Answer:
(b) General Agent

Question 11.
A merchant middleman who sells chiefly to its: (UP 2016)
(a) Wholesaler
(b) Customer
(c) Retailers
(d) None of these
Answer:
(c) Retailers

Question 12.
Wholesaler invests a lot of ………
(a) Capital in business
(b) labour in business
(c) land in business
(d) None of these
Answer:
(a) Capital in business

Question 13.
Wholesaler purchases goods in ………
(a) Bulk
(b) Small quantity
(c) Either (a) or (b)
(d) None of these
Answer:
(a) Bulk

Question 14.
V.P.P. stands for:
(a) Valuable Payment Post
(b) Value Payable Post
(c) Value Payable Prepaid
(d) None of these
Answer:
(b) Value Payable Post

Question 15.
Super market is a business organisation which is established and run on ……..
(a) Small scale
(b) Large scale
(c) either (a) or (b)
(d) None of these
Answer:
(b) Large scale

Invoice, Mercentile Agents and Account Sale Definite Answer Type Questions (1 Mark)

Question 1.
What kind of statement of goods prepared by the seller?
Answer:
Invoice.

Question 2.
Name of the document which is prepared even before the sale for giving information to the concerned customer.
Answer:
Proforma Invoice.

Question 3.
Name the agents who are appointed to sell goods on behalf of their principals.
Answer:
Sale Agents.

Question 4.
Name the agent appointed to do certain acts on behalf of the principal in return for a commission.
Answer:
Commission Agent.

Question 5.
What kind of commission gives on a credit sale to an agent?
Answer:
Del Credere Commission.

Question 6.
Name the business organisation which run on a large scale.
Answer:
Super Market.

Question 7.
In which country consumers co-operative store originated?
Answer:
England.

Invoice, Mercentile Agents and Account Sale Very Short Answer Type Questions (2 Marks)

Question 1.
What is Invoice? (UP 2015)
Answer:
Invoice is a statement of goods prepared by the seller and is sent to the buyer along with the Railway receipt or transport documents. The statement of goods contains the list of goods which are sent to the buyer according to his order.

Question 2.
What do you mean by proforma invoice? (UP 2015)
Answer:
Proforma Invoice: It is essential that an ordinary invoice should be distinguished from a proforma invoice. The latter is an invoice merely for the form’s sake or for the sake of information, hence, it is called Proforma Invoice.

Question 3.
What is an agent?
Answer:
A person acting on behalf of another person is known as an agent. An agent is a person employed to do any act for another or to represent others in dealings with the third person.

Question 4.
Who is Del Credere Agent?
Answer:
Del Credere agent is an agent appointed for the sale of certain goods and who gives a guarantee that all the credit sales would be duly paid for, in return for an extra commission known as ‘del credere commission’.

Question 5.
What is account sale?
Answer:
The statement which the selling agent prepares and submits to his principal is called account sales, (account of sales). Therefore, account sale is a statement regarding the sale of goods, which is periodically submitted to the principal by his agent.

Question 6.
Give any two characteristics of an agent.
Answer:
Two characteristics of an agent are:

• Right on Goods: The agent does not pass any right on the goods. The ownership of goods always remains with the principal. The agent has to only make arrangements for increasing sales.
• Eligible to contract: The appointment of an agent or the existence of agency is the result of the contract. This contract is entered between the agent and the principal.

Invoice, Mercentile Agents and Account Sale Short Answer Type Questions (4 Marks)

Question 1.
What is ‘loco invoice’? What are its kinds?
Answer:
Loco Invoice: When the seller quotes any price for the goods, the price is for the goods to be delivered at the godown of the seller. The price does not include any expenses which are done by the seller on packing, cartage etc. This kind of invoice is known as loco invoice.
Loco Invoice can be of the following three kinds:

• In the Absence of Advance.
• In the case of Advance Payment.
• Advance Payment at will.

Question 2.
What do you mean by E O. R. invoice?
Answer:
In case of F. O. R. invoice, only these expenses which are incurred by the seller after the loading of the goods in railway wagons would be shown as charges, the rest are included in the F.O.R. price.

Question 3.
What do you mean by chain stores or multiple shops?
Answer:
Multiple shapes are the shops established by those producers who want to sell their products in different towns or in different localities of the same town.

Question 4.
What is a mail-ordered business?
Answer:
In a mail-order business, every activity of purchase and sale is done by the post. It is a method of retail sale on a large scale. There is no direct conversation between a buyer and a seller. The buyer places an order of things required by him through the post and the seller despatches the things by the post. In such type of business, there is no need of displaying the goods.

Question 5.
What do you understand by departmental stores?
Answer:
Departmental stores are those institutions of retail trade where different departments dealing in various commodities are situated under the same root and work under the control of one management.

Question 6.
What are multiple shops?
Answer:
Multiple shops are the shops established by those producers who want to sell their products in different towns or in different localities of the same town. The purpose of this is to keep direct personal contact with the customers by eliminating middlemen.

Question 7.
Give any two advantages of mail-order business.
Answer:
Two advantages of mail-order are as follows:

• No Bad Debts: All transactions are on a cash basis and thus there is no danger of bad debts.
• Expansion of business: There is a wide scope in the mail order business. The businessman reaches there where goes the post.

Question 8.
Write contents of account sale.
Answer:
Contents of Account Sale are as follows:

1. Name of the Principal.
2. Name of the ship carrying the goods if the principal lives in a foreign country.
3. Commission Deducted.
4. Advance sent to the principal.
5. Particular of goods sold:
   • Quantity of goods sold
   • Quality of goods sold
   • Price of goods sold along with the rate.
6. Expenses incurred on behalf of the principal in selling the goods.
7. Amount of bill accepted as advance.
8. Amount payable
9. Particulars and mode of the amount remitted.

Question 9.
Distinguish between factor and broker.
Answer:
Difference between factor and broker

Factor	Broker
1. He sells the goods in his own name.	1. He simply conducts negotiation and the actual sale is made in the name of his principal.
2. He is appointed to sell all the goods.	2. He is appointed to buy and sell a particular commodity.
3. He is given the possession of the goods.	3. He is not given the possession of the goods.
4. He himself is liable in respect of the contract of sale.	4. He performs in the name of his principal and as such the principal is liable in all respects of the transactions.

Question 10.
Write a short note on Del Credere Commission.
Answer:
Del Credere Commission: An agent can sell the goods for cash as well as for credit unless the principal has made specific instructions for cash sales only. There are always possibilities of bad debts in case of credit sales. If the principal wants to save himself from this kind of loss he gives an extra commission to the agent in addition to the simple commission. This extra commission is known as ‘Del Credere Commission’. Which ensures the bad debts and the agent pays the number of bad debts if any to the principal. In this way, the principal saves himself from bad debts by giving del credere commission.

Question 11.
What are the characteristics of retailers?
Answer:
The following are the characteristics of retailers:

• Retailers purchase goods from wholesalers and sell them to the ultimate consumers.
• The retailer purchase goods in small quantities from wholesalers and sell them in still smaller quantities to the consumers.
• The retailer has a direct relationship with the consumer.
• Retailers do not specialise in specific product but deal in a variety of goods.

Question 12.
What are the services of retailers towards wholesalers?
Answer:
The facilities and services provided by retail traders to the wholesaler may be enumerated as below:

1. Collection of Necessary Information: Retailers remain in direct touch with consumers so they provide necessary pieces of information regarding fashion, taste and habits of consumers to the wholesaler.
2. Relieves from Retail work: Retailers sell goods in small quantities to consumers and thus they relieve the wholesaler from this burden.
3. Relieves from Local Advertisement: It is the retailer who advertises the product in local markets. The wholesaler need not do this.
4. No Need of keeping contact with the consumers: There is no needier the wholesaler to keep direct contact with the consumer for the purpose of sales. This service is performed by the retailer.
5. Advantages of Increased Sales: Retailers remain in direct and close contact with customers and can induce them to buy more or to buy new products. Due to this, a wholesaler gets the advantage of the increased sale.

Invoice, Mercentile Agents and Account Sale Long Answer Type Questions (8 Marks)

Question 1.
Distinguish between Invoice and Account sale. (UP 2005)
Or
What is the meaning of Invoice and Account Sale? Differentiate between these two. (UP 2006,09)
Or
What is Invoice? Prepare Invoice in a proper form with imaginary figures. (UP 2008, 10)
Or
What is Invoice? Prepare an invoice with the help of imaginary figures. (UP 2018)
Or
What is account sale? Prepare account sale with the help of imaginary information. (UP 2013)
Or
What is the difference between ‘Invoice’ and ‘Account of Sales’? Prepare an Account of Sales with the help of imaginary figures. (UP 2019)
Answer:
Invoice: The business transactions between the buyer and seller are accomplished according to the terms and conditions agreed upon by them. The purchaser sends the order to the seller, in which he mentions the quantity he wants to purchase and also states that the terms and conditions are acceptable to him. On receiving the order, the seller sends the acceptances of order in writing. Then the seller starts collecting the goods and gets then packed according to the instructions of the buyer and arranges to send the goods to the buyer either by railways or by any other means of transport.

An invoice is a written document, sent by the seller to the buyer, stating therein the quantity and quality of goods sent, their prices, expenses incurred by him on behalf of the buyer and such other particulars. The buyer is also able to find out from an invoice the total amount he has to pay and the details thereof.

Example of Invoice:
Seller: Preeti Bookseller, Kamla Nagar, Kanpur.
Buyer: B.N. Baijal and Sons, Wright Town, Jabalpur.
Description of Goods:
20 copies of Indian History @ Rs. 24 per copy
50 copies of Modern Maths @ Rs. 20 per copy
30 copies of Advanced Accountancy @ Rs. 35 per copy
Expenses Incurred:
Packing Rs. 35, Cartage Rs. 10, Loading Rs. 10, Freight Rs. 30, Insurance Rs. 15.
Terms and Conditions:
Trade Discount 10%
2% Cash discount, if payment is made within one month.
Prepare a proper invoice.

Account Sale: The owner of the goods has a right to sell them. Sometimes the owner appoints some agents to increase the volume of sales. In this way the goods can be sold by (a) The Owner, (b) The Agent.

The owner sends the goods to his agent or agents on certain terms and conditions. The agents sell the merchandise and calculate the amount received from actual sales. He deducts from this amount the expenses incurred by him on behalf of his principle and commission. The balance is remitted to the principal. The agent submits a written statement periodically (generally every month) to his principle specifying the details of goods sold, expenses made and commission deducted.

Difference between Invoice and Account Sale

Invoice	Account Sale
1. Invoice is prepared by the seller and is sent to the buyer.	1. Account Sale is the statement which the selling agent prepares and submits to his principal.
2. Invoice is prepared after sending the goods to the buyer.	2. Account sale is prepared by the agent after selling whole goods or periodically.
3. All the expenses made by the buyer are added to the cost of goods sold.	3. The expenses incurred by the agent and his commission is deducted from the amount of sale.
4. If there is any trade discount it is deducted from the number of goods.	4. No question arises of any discount in the account sales.
5. No question arises of any commission in the invoice. In Foreign Invoice, the commission is calculated on the amount of invoice and is written at the bottom of the invoice, added to the amount of invoice.	5. The commission is the reward for agents’ efforts. It is calculated at a fixed percentage of the number of sales. It is deducted from the number of sales.
6. It is of two kinds:  Invoice (ordinary) Proforma Invoice.	6. It is of only one kind. The calculated amount of sales is sent by the agent through cheque or bank draft.
7. The amount of invoice is paid by the buyer to the seller after receiving the invoice.	7. The same amount is also mentioned in the account sale.
8. If there is any term or condition of payment,, it is mentioned in the invoice.	8. No question arises of any term or condition in the calculation of sales.
9. Invoice is signed by the seller or the person authorised by him to do so.	9. Account sale is signed by the sales agent or by the person authorised by him.

Question 2.
What is an Account Sale? How is it different from Statement of Account?
Or
What is ‘Account Sale’? Prepare Account Sale with the help of imaginary figures. (UP 2011, 13)
Answer:
Account Sale: Sometimes the owner appoints some agent to increase the sale.
The owner sends the goods to his agent on certain terms and conditions. The agent sells the merchandise and calculates the number of actual sales which is submitted to the principal at regular intervals. He deducts from this all the expenses incurred by him on behalf of the principal and the balance is remitted to the principal. The statements which the selling agent prepares and submits to his principal is called ‘Account Sale’. The account sale gives details and the values of the sales and of expenses incurred by the agent to his principal.

Difference between Statement of Account and Account Sale

Statement of Account	Account Sale
1. This is prepared by the seller and is sent to the customer.	1. The Statement which the selling agent prepares and submits to his principal is called account sale.
2. The statement of account is prepared to enable the buyer to compare the account with his own ledger and to check its accuracy.	2. The account sale is sent to the principal by the selling agent as it gives the details and value of the sales and the expenses incurred by the agent on behalf of his principal as well as commission due to the agent.
3. This is sent to purchaser monthly or quarterly or half-yearly.	3. The account sale is sent by the agent after selling the whole goods or periodically.
4. The description of expenses is absent. Only the quantity sent, the amount received arid the balance of amount to be paid is shown.	4. Under this, the expenses incurred by the agent and his commission is deducted from the amount of sale and the amount sent to the principal by draft is stated.
5. Statement of account is a copy of the debtor’s account in the seller’s ledger.	5. Account sale is prepared on the printed forms according to the business customs.

Question 3.
What is Loco Invoice? Give a specimen of Loco Invoice with the help of imaginary figures. (UP 2007)
Answer:
Loco Invoice: When the seller quotes any price for the goods, the price is for the goods to be delivered at the godown of the seller. The price does not include any expenses which are done by the seller on packing, cartage etc. This kind of invoice is known as loco invoice.

Specimen of Loco Invoice:
Seller: Preeti Booksellers, Kamla Nagar, Kanpur:
Buyer: B.N. Baijal and Sons, Wright Town, Jabalpur
Description of Goods:
20 copies of Indian History @ Rs. 48 per copy
50 copies of Modern Maths @ Rs. 50 per copy
30 copies of Advanced Accountancy @ Rs. 75 per copy.
Expenses Incurred:
Packing Rs. 175, Cartage Rs. 165, Loading Rs. 80, Freight Rs. 155, Insurance Rs. 355.
Terms and Conditions:
Trade Discount 10%
2% Cash discount if payment is made within a month.
Prepare a Proper invoice.

Question 4.
Prepare an invoice from the following particulars:
Seller: Raju Book Store, Adarsh Nagar, Kanpur
Purchaser: Ram Lai and Sons, Katra, Allahabad.
Description of transactions:
50 copies – High School Commerce @ Rs. 50 each
50 copies – Intermediate Commerce @ Rs. 100 each.
40 copies – Advance Accountancy @ Rs. 80 each.
Expenses incurred:
Packing Rs. 200
Carriage Rs. 175
Loading Rs. 80
Insurance Rs. 400
Conditions:
(i) Trade discount @ 10%.
(ii) 2% cash discount is allowed on payment within a month. (UP 2015)
Solution:

Question 5.
M/s Moni and Sons, Kolkata sold the following articles to Soni & Sons of Varanasi:
25 Dozen bed-sheets @ Rs. 12 per bed-sheet
120 Table-clothes @ Rs. 40 per dozen
288 Towels @ Rs. 24 per dozen
24 Big Towels @ Rs. 36 per dozen.
Following expenses were incurred by the seller for sending the articles: Packing charges Rs. 10, Carriage Rs. 15, Railway freight Rs. 225, Insurance Rs. 10, 7, 2 % Trade discount was allowed to purchaser. Assurance was given for allowing 1% cash discount for making payment within a month. Prepare an invoice from the above details.
Solution:

Question 6.
M/s Ghosh Brother, Kolkata sold the following goods to the firm Modern Cloth House, Lucknow:
25 Dozen Bed-sheet @ Rs. 50 per Bed-sheet
120 Table clothes @ Rs. 240 per dozen
288 Towels @ Rs. 120 per dozen
20 Big Towels @ Rs. 360 per dozen
Seller made the following expenses in sending the goods:
Packing expenses Rs. 50
Carriage Rs. 55
Railway Freight Rs. 50
Insurance Rs. 30
Trade discount given to buyer were 7% and 1% cash discount if payment is made within a month. Prepare an invoice.
Solution:

Question 7.
What is Sales Statement? What are the differences between Invoice and Sales Statement? Prepare Sales Statement on the basis of imaginary information.
Mumbai sold following goods to M/s Raj Traders, Allahabad:
200 Plastic Buckets 20 Litre @ Rs. 40 each;
100 Plastic Tubs 30 litre @ Rs. 60 each;
100 Plastic Trey @ Rs. 30 each 8” × 15”.
10% Trade Discount is allowed to the purchaser and 2% cash discount if payment is made within a week.
Prepare invoice in the right format from the above particulars. (UP 2010)
Solution:

Invoice
M/s Plastico Ltd.

Mumbai
Date: 30 March, 2010

To,
M/s Raj Traders, Allahabad

Question 8.
M/s Badruddin & Sons, Aminabad, Lucknow sold the following goods on behalf of M/s Karuna Brothers, Mahatma Gandhi Marg, Kanpur on January 5, 2013:
100 Silk Sarees @ Rs. 500 per Saree
100 Cotton Sarees @ Rs. 200 per Saree
500 Metre Shirting @ Rs. 80 per metre
100 Dhoti Mardani @ Rs. 150 per Dhoti
Freight Rs. 2,100, Cartage Rs. 150; Packing Rs. 250; Other expenses Rs. 150 and Commission @ 15%.
Prepare Account Sale from the above information. (UP 2014)
Answer: