Invoices, receipts and the movement of goods

A commercial transaction can involve an order, delivery, an invoice and payment. These are connected events, but they do not all prove the same thing. A document describing a charge is different from evidence that payment has been received.

An invoice normally identifies the goods or services supplied and the amount charged to a buyer. A receipt acknowledges payment received. An invoice may be issued before payment, so do not assume that seeing an invoice proves the account has been settled.

Worked example: a retailer buys ten notebooks at 80 naira each and sells all ten at 100 naira each. Cost of goods sold is 800 naira; sales are 1000 naira. Gross profit is 200 naira before other expenses. If the question supplies additional relevant expenses, those must be considered when calculating a further profit measure.

Stock records track quantities received, sold, returned or otherwise adjusted. Suppose opening stock is 20 units, another 15 arrive and 12 are sold. Ignoring other movements, closing stock is 23 units. Accurate records support replenishment decisions and checks for discrepancies; they do not guarantee that loss or damage can never occur.

Working capital is commonly calculated as current assets minus current liabilities. If current assets are 9000 naira and current liabilities are 4000 naira, working capital is 5000 naira. Do not substitute total sales into a question that asks for this balance-sheet measure.

Practice:
1. Which document normally acknowledges payment?
2. Find gross profit if sales are 2400 naira and cost of goods sold is 1800 naira.
3. Opening stock is 30, receipts are 10 and sales are 16. Find closing stock, with no other movements.
4. Find working capital for current assets of 7000 and current liabilities of 2500 naira.

Answers: 1 receipt; 2 600 naira; 3 24 units; 4 4500 naira. These figures are illustrative learning examples, not advice for a real business.