FUNDAMENTALS OF
ACCOUNTANCY,
BUSINESS, AND
MANAGEMENT
CHAPTER 7
Business Forms
Learning Objectives
• To understand the purpose of business forms in
accounting
• To differentiate internal and external business forms
• To identify the different kinds of internal business
forms
• To identify the different kinds of external business
forms
• To understand the revenue and expenditure flows
using business forms
What Are Business Forms?
They are used to document business transactions; they are
pictures of business transactions.
They are evidence of the occurrence of transactions.
They also describe the details of transactions.
The contents of the forms give the reader an understanding
of the various aspects of the transactions such as:
quality and quantity of merchandise requested, ordered
or delivered;
price agreed upon for the merchandise;
the personnel who prepared the form; and
officers who authorized the transaction.
Internal Business Forms
What are INTERNAL BUSINESS FORMS?
These forms are used only within the company.
These forms may be used by seller only or the buyer only.
They document the accountability of the personnel on the
transactions that occur.
They intend to answer the following questions:
What are the particulars requested on the form?
Who initiated the transaction?
Who determined the correctness of the information on the
form?
Who gave the final authorization to implement the
transaction?
Internal Business Forms
What are the DIFFERENT TYPES OF
internal business forms?
1. Purchase Request (PR)
It triggers the start of the purchasing process.
It may be used for the acquisition of inventory, office
supplies, or equipment.
It documents the processes performed before an order for
merchandise or a need for equipment is communicated to
the seller.
Internal Business Forms
What are the DIFFERENT TYPES OF
internal business forms?
2. Receiving Report (RR)
It is an internal report prepared by the buyer’s personnel
in charge of receiving deliveries.
It is used to document the quality and quantity of items
received by the personnel from the suppliers.
In some cases, the receiving personnel fills up the
quantity on a blind PO to substitute for a separate RR.
Internal Business Forms
What are the DIFFERENT TYPES OF
internal business forms?
3. Check Voucher (CV)
In companies which process payments through a
voucher system, a CV is prepared for each check that
will be used for payment.
A CV documents the process for the preparation,
verification and authorization of check payments.
The check voucher package includes the CV and the
supporting documents such as supplier’s bill, invoice or
statement of account.
External Business Forms
What are EXTERNAL BUSINESS FORMS?
They are used both inside and outside the company.
They are used by both selling and buying companies.
They are forms are filled up by both parties.
These forms serve as evidence of the occurrence of a
stage of the transaction.
External Business Forms
What are the DIFFERENT TYPES OF
external business forms?
1. Purchase Order (PO)
A PO is a form used by the buyer to communicate his/her
exact orders to the seller.
The quality specifications and quantity ordered is indicated on
the PO form.
A valid PO issued by the buyer is approved by the buyer’s
Purchasing Department Head.
The buyer is required to accept delivery of the ordered
merchandise as long as it meets the specifications on the PO.
On the other hand, the seller’s acceptance of the PO signifies
his/her commitment to make delivery within the specified
period.
External Business Forms
What are the DIFFERENT TYPES OF
external business forms?
2. Delivery Receipt (DR)
A DR is an evidence of delivery issued by the seller.
The form contains information on the quality and
quantity of items delivered.
It is tagged to a PO. For large orders, one PO can be
divided into a number of deliveries. Each delivery is
accompanied by one DR.
It is signed by the buyer to indicate that the quality and
quantity of the items listed had been received.
External Business Forms
What are the DIFFERENT TYPES OF
external business forms?
3. Sales Invoice (SI)
An SI is a communication from the seller to the buyer.
It documents the amount of payment that the seller is
claiming.
While a DR focuses on quantity of items delivered, the SI
includes the price of the items delivered and for collection.
The Bureau of Internal Revenue (BIR)-approved SI format
includes a breakdown of VAT computation. Net Sales is
computed based on VAT-inclusive selling price, also
referred to as gross price divided by 1.12. VAT is net sales,
or sales exclusive of VAT, multiplied by 12%.
External Business Forms
What are the DIFFERENT TYPES OF
external business forms?
4. Provisional Receipt (PR) and Official Receipt (OR)
ORs are evidence of payment, meaning a buyer who
claims that an account has been settled must be able to
show an official receipt.
The BIR has an approved format of ORs.
Some companies choose to initially issue a PR for check
payments for their protection until the buyers’ banks
honor the checks.
External Business Forms
What are the DIFFERENT TYPES OF
external business forms?
5. Statement of Account (SOA) or Billing Statement
A SOA or Billing Statement is prepared by the seller and
submitted to the buyer.
It lists down the seller’s transactions with the buyer over a
specific period of time, normally one month.
It allows both parties to confirm their record with each
other. The seller is basically telling the buyer (a) their sales
transactions identified by SIs, and (b) payments they
received identified by the ORs. It is also a reminder to the
buyer of the amount he/she owes to the seller.
The BIR also has an approved format for SOAs.
