Note on Home Trade

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Domestic Trade
Domestic Trade

The trade which is carried on within a country is called home trade. It is an internal trade in which goods are bought and sold within the boundaries of a country. In home trade, payment is made in national currency. In home trade, the party involved in purchasing goods is called the buyer and the party involved in selling goods are called the seller.

Documents used in Home Trade

In the process of buying and selling, some documents are created and exchanged between the buyer and seller. These documents support the trade legally. These serve as evidence. The following are the main documents used in home trade: -

  1. Enquiry Letter
    Making an enquiry
    Making an enquiry

    It is the first step in which the buyer writes and sends a letter of enquiry to the seller, asking about the quality, quantity, price and other conditions of trade. This is the letter which contains full questions in regard of goods and terms and conditions of trade.

  2. Reply Letter
    It is the second step of the home trade. After receiving the letter of enquiry from buyers, the seller sends a letter to the buyer which is called reply letter. It is also called quotation. In this letter, all the answers to the enquiry in regard of goods and terms and conditions of trade are given to the buyer.

  3. Order Letter
    Ordering goods
    Ordering goods

    After receiving quotation letter from different sellers, the buyer analyses them carefully and selects the most favourable one. Then the buyer sends purchase order through a letter which is called order letter. Since, it is the ordering for the purchase of goods, it should be written very carefully.

  4. Acknowledgement Letter
    After receiving an order of purchase of goods, the seller then writes a letter to inform the buyer about the receipt of the order and its acceptance. This letter also confirms the right delivery of goods on right time.

  5. Invoice
    Invoice
    Invoice

    After making the goods ready for delivery, a bill is prepared to give details about the unit price, total price, qualities, and quantities of goods being dispatched and other information like discount which is called invoice. So, an invoice is a bill of goods prepared by the seller and sent along with sold goods. It is generally prepared by four copies – 1 copy for the buyer, 2 copies for the transport company and 1 copy is kept by the seller himself.

  6. Receipt of goods
    Usually, in the home trade, the goods are carried through truck transportation. The seller gives the delivery of goods to the transport company and obtains a receipt from it as the evidence which is known as a receipt of goods. Hence, the receipt of goods is a document issued by the transport company stating that the goods have been received to carry them from the place of the seller to the place of the buyer.

  • The trade which is carried on within a country is called home trade.
  • Enquiry letter is the letter which contains full questions in regard of goods and terms and conditions of trade.
  • After receiving quotation letter from different sellers, the buyer analyzes them carefully and selects the most favorable one.
  • After receiving order of purchase of goods, the seller then writes a letter to inform to the buyer about the receipt of the order and its acceptance.
  • Invoice is a bill of goods prepared by seller and sent along with sold goods.
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Very Short Questions

In the process of buying and selling, some documents are created and exchanged between the buyer and seller. These documents support the trade legally. These serve as evidences. The following are the main documents used in home trade: -

  1. Enquiry Letter
    It is the first step in which the buyer writes and sends a letter of enquiry to the seller, asking about the quality, quantity, price and other conditions of trade. This is the letter which contains full questions in regard of goods and terms and conditions of trade.

  2. Reply Letter
    It is the second step of the home trade. After receiving the letter of enquiry from buyers, the seller sends a letter to the buyer which is called reply letter. It is also called quotation. In this letter, all the answers to the enquiry in regard of goods and terms and conditions of trade are given to the buyer.

  3. Order Letter
    After receiving quotation letter from different sellers, the buyer analyses them carefully and selects the most favourable one. Then the buyer sends purchase order through a letter which is called order letter. Since, it is the ordering for the purchase of goods, it should be written very carefully.

  4. Acknowledgement Letter
    After receiving an order of purchase of goods, the seller then writes a letter to inform to the buyer about the receipt of the order and its acceptance. This letter also confirms the right delivery of goods on right time.

  5. Invoice
    After making the goods ready for delivery, a bill is prepared to give details about the unit price, total price, qualities, and quantities of goods being dispatched and other information like discount which is called invoice. So, an invoice is a bill of goods prepared by the seller and sent along with sold goods. It is generally prepared by four copies – 1 copy for the buyer, 2 copies for the transport company and 1 copy is kept by the seller himself.

  6. Receipt of goods
    Usually, in the home trade, the goods are carried through truck transportation. The seller gives the delivery of goods to the transport company and obtains a receipt from it as the evidence which is known as a receipt of goods. Hence, the receipt of goods is a document issued by the transport company stating that the goods have been received to carry them from the place of the seller to the place of the buyer.

The act of buying and selling of goods and services between the persons or parties of the same country with the motive of earning profit is known as home trade. Following are the two types of home trade:

  1. Wholesale Trade:
    The act of buying and selling of goods and services in large quantities is known as wholesale trade. It is the trade for resale of goods to the final consumers.
  2. Retail Trade:
    The act of buying and selling of goods and services in small quantities is known as retail trade. It is the trade for final consumption of the goods.

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  • A document issued by the transport company stating that the goods have been received to carry them from the place of the seller to the place of the buyer is called ______.

    a confirmation letter
    a letter of credit
    an invoice
    a bill of lading
  • Reply is also called ______.

    refusal
    quotation
    acknowledgement
    inquiry
  • ______ confirms the right delivery of goods on right time.

    Quotation letter


    Acknowledgement letter


    Reply letter


    Enquiry letter


  • Invoice is generally prepared by ______ copies.

    no
    five
    four
    two
  • A bill of goods prepared by the seller and sent along with sold goods is called ______.

    a confirmation letter
    a letter of credit
    an invoice
    a bill of lading
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