Unit 4
Accounts Payable
and Receivable
Every business in Pettisville is involved in
buying and selling of goods and/or
services.
 All businesses except Pettisville Post Office
prepare invoices – either item invoices or
service invoices.
 Businesses that sell merchandise must
also prepare goods for shipment through
Pettisville Post Office or 18 Wheeler Truck
Lines

Overview
It is very important that you understand
the process of buying and selling before
the simulation begins.
 You will learn how to prepare a purchase
order (Lesson 4.1) and how to prepare an
item invoice (Lesson 4.2) before the
simulation begins.
 The service invoices is similar to the item
invoice except that there are no shipping
charges.

Timing
Item invoices
 Office supplies requisitions
 Purchase orders
 Service invoices

Business Forms
Be sure you understand the difference
between wholesalers and retailers.
 The Denim Maker and Mean Jeans
Manufacturing Co. are wholesalers and,
therefore, do not charge sales tax on
goods for resale.

Managing Tips
One ethical problem that occurs in some
businesses has to do with employees who
make purchases for their companies.
 Suppliers sometimes offer “kick-backs” or
free gifts to entice employees to buy from
them.
 Many businesses have written policies
stating that employees may not receive
gifts or money for any purchases made
for the company.

Business Ethics

One of the biggest ethical dilemmas
employers have is pilferage, the shrinkage of
inventory due to employee theft.
◦ This is sometimes a bigger problem that shoplifting.
◦ Managers can quickly spot pilferage by taking
inventory.
◦ For example, a fast food restaurant that sells 1,000
hamburgers on a given day but used 1,200 patties
in the process probably lost the remaining 200
hamburger patties to pilferage.
◦ The same manager will control employee theft from
the cash register by counting the money in the cash
drawer every hour.
Business Ethics
In this simulation, the term supplier is
always used to describe businesses that
sell goods to together businesses.
 The term vendor is another name for
supplier

Managing Tips
Purchase orders should not be mailed for
cash and carry purchases of supplies from
Taylor Office Supplies.
 Managers should go to the Taylor Office
Supplies and carry the purchase order
and their checkbooks with them to make
the transaction in person.

Managing Tips




Cash flow is extremely important in business.
Some companies offer a discount to
customers who pay invoices quickly.
For example, 2/10 n/30 listed on an invoice
means that the customer gets a 2% discount
for paying the invoice within 10 days of the
invoice date.
Payments made after the discounted period
(day 11 through day 30) must be the net
amount.
Managing Tips

As a manager, if you are caught up you will plan an
exotic trip at Passports-2-Go. Passports to go will get
travel rates online. Managers may browse the
following sites
◦ www.cheaptickets.com
◦ www.expedia.com
◦ www.jetvacations.com
◦ www.lodging.com
◦ www.orbitz.com
◦ www.priceline.com
◦ www.travel.com
◦ www.travelocity.com
◦ www.uniglobe.com
4.3 Service Invoices

As a manager, if you are caught up you
will request services at Creative
Advertising Agency or Popular Designs.

Two Pettisville businesses charge
commissions on service invoices. Creative
Advertising charges a rate of 15% and
Noveau Investment Company charges a
rate of ½%
4.3 Service Invoices

The following businesses prepare service
invoices
◦
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Buckeye Equipment
Creative Advertising Agency
Lee Community Center
Noveau Investment Company
Passports-2-Go
Pettisville bank
Popular Designs
Taylor Office Supplies
4.3 Service Invoices
 When
you are referred to a page in
the student Reference Book, be sure
to follow the correct automatic or
manual procedures followed by the
correct numerical steps.
4.3 Service Invoices

Understand the importance of a remittance slip.
It is prepared by the customer and returned with
the customer’s payment.
◦ When paying an electronic invoice, the only
part of the remittance slip that must be
completed is the AMOUNT ENCLOSED box.
◦ When paying a manual invoice, the entire
remittance slip must be completed by the
customer
4.3 Service Invoices