Concept explainers
Explain the difference between a customer’s order and a sales order, as these terms might be used by a manufacturing company making sales on credit.
Differentiate between the customer’s order and a sales order.
Explanation of Solution
Customer’s order:
The customer’s order is nothing but the purchase order given by the customer. This document will have the specification of the goods or services to be delivered to the customers from their end.
Sales order:
The sales order is the document created based on the purchase order of the customer. This document will have all the specification for the different departments involved in delivering the goods or services to the customers such as credit department, shipping department, billing department, and accounts receivable department.
Difference between the customer’s order and sales order:
The major difference between the customer’s order and the sales order is the details of the documents. As the customer’s order is the external order created by the customer whereas sales order is the internal order created based on the purchase order.
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Principles of Auditing & Other Assurance Services (Irwin Accounting)
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