Proforma invoice looks like an invoice but in reality, it is not an invoice. Proforma invoice is prepared while sending goods by consinor to consignee or while transferring goods from the head office to branch. It is not a debit note or proof of indebtedness and it serves like a quotation. These invoices are not recorded in books of accounts but a carbon copy of the invoice is maintained for future reference. The use of proforma invoice is found in the following cases:

(a) It is prepared at the time of sending goods on approval basis or sale or return basis sale.

(b) It is prepared when the prospective buyer wants to know the total price of the goods.

(c) It is prepared at the time of sending goods on consignment.

ADVERTISEMENTS:

(d) The use of proforma invoice is made at the time of transferring goods from the head office to a branch.

(e) It serves like a quotation when proper quotations are not sent. (/) It is prepared at the time of despatching goods on foreign trade.