What does the term 'invoice' refer to in a purchase context?

In a purchase context, the term 'invoice' refers specifically to a bill for goods sold that provides a detailed account of the items purchased along with the terms of sale. An invoice typically includes important information such as the names of the buyer and seller, a description of the goods or services provided, quantities, prices, payment terms, and sometimes tax information. This document serves as a formal request for payment and is a critical part of the financial record-keeping process for both the seller and the buyer.

The details on an invoice are crucial for ensuring transparency in the transaction and for maintaining accurate financial records. The clarity of an invoice helps prevent any disputes regarding what has been agreed upon in the transaction, as it serves as both a receipt and proof of credit for the seller. Invoices are essential for accounting purposes, assisting in tracking sales and managing cash flow within a business.