This action might not be possible to undo. Are you sure you want to continue?
This article looks at what is source document, its importance, good salient features of a source document, type of source document and its individual use/function. Definition of a Source Document: A written document that provides details of a transaction and the evidence that the transaction has taken place. All accounting entries are based on information derived from these source documents. Importance of Source Documents: Source documents are important to businesses - to provide evidence or proof that a transaction has occured; Used as part of a process to record information into the books of original entry and are required for audit purposes. Salient features of a good source document: Date when transaction took place; Names and addresses of the parties concerned namely the buyer and seller; Nature of the transaction ie description of the goods or services; Terms and conditions of the transaction ie trade discount, cash discount, delivery details and an authorised signature. Types Of Source Documents And Their Uses/functions: INVOICE: To inform buyer of the amount to pay for goods&services supplied by the seller CREDIT NOTE: To correct an overcharge in the invoice DEBIT NOTE: To correct an undercharge in the invoice PAYMENT VOUCHER: Used as evidence of payment to a named party PETTY CASH VOUCHER: Used as evidence of payment ( very small sum) to a named party
CHEQUE COUNTERFOIL: Used as record of amount paid on a particular numbered cheque to the payee RECEIPT: To acknowledge money received BANK STATEMENT: As summary of monthly transactions of current account holders with the bank. .
The quotation may include the cost to produce. . Purchase Order – This is a written order giving the authorization to purchase goods or services from a supplier. canceled checks.Different Types of Source Documents Used in Accounting by Steve McFarlane (26. deliver and finance the purchase. Source documents detail the particulars of transactions that include the date. or when some other event has occurred that has the effect of reducing the amount that the customer owes to the supplier. Types of source documents include cash receipts. They also serve as evidence that a transaction took place and is part of the audit trail for as long as those documents are required to be kept by law or policy. Edited by Jean Scheid Published on Jan 9. Credit Note – This document is sent by a supplier to a customer to reduce the liability of the customer.864 pts ). and the numbering system that it is based on. name. Sales Order – A sales order (SO) is an internal document that is generated from a customer's purchase order. Source Documents & Uses Here is a summary of the different types of sources documents and their uses: Quotation – This is an agreement. they are a part of the record keeping process. and product description among other relevant pieces of information. In essence it is a negative invoice that is issued when goods are returned. terms. from a producer to a potential customer to sell goods or services at a particular price and quantity. This document is generated to create an audit trail/control to be used to monitor the entire sales process using the company’s internal numbering system instead of relying on the customer's purchase order. Of such. when there was an overpayment. Source documents may be paper-based business forms or electronic documents and are used for initial input to the accounting system. usually written. address. Debit Note – This document is sent from a customer to a supplier to request a credit note in respect to an overpayment or return of goods. invoices and timesheets. 2011See More About: Accounting Business What follows here is an outline of the different types of source documents as well as a description of the more popular ones that are used in business today.
but they are also use to input data into the general accounting system. the various types of source documents include any written or electronic proof that a transaction or business event occurred. for goods that were delivered. Not only are they proof that a transaction actually occurred. Goods Receipt Note – Outlines the list of goods that were received from a supplier. . In addition to those we discussed above.Invoice – This document is sent to request payment for monies owed. also known as a packing slip. account settlement or installment. Receipt – A written document that confirms that money has been received as a down payment. Goods Dispatch Note – Outlines the list of goods that were sent to a customer. and indeed the audit trail. or services that were rendered. Conclusion Source documents are an important part of the accounting process.
errors if any can be pinpointed while the audit examination is provided with audit trails. Basically. That way. not all source documents used for accounting purposes are pre-numbered or qualify as accountable forms. it is important to include information. amount. pre-numbered as a control feature. Still. certain regulations require the addition of certain features that would render them legal documents.An Overview of Accounting Source Documents by ciel s cantoria (80. Source documents may be manually written or encoded or electronically generated. A single type of document should have more than one copy. A closer look at ten of the most common accounting source documents will present readers with a clearer perception about the aforementioned characteristics: . accounting standards require that these business forms contain information that are basic for recording purposes. However. Some business documents serve as internal control tools or are used for tax purposes. and are called accountable forms. What are Accounting Source Documents? Accounting source documents are the primary reference materials used as the bases for the basic acts of recording and summarizing business transactions. they should possess the following basic characteristics. In fact the more users involved as parties to a transaction. usually reference codes. that will link one accounting source document to another as they flow from one accounting process to the next and from period to period. What are the Basic Characteristics of Accounting Documents? As reference material for accounting purposes. Each organization or entity may have distinct features and structures of business forms that are readily identifiable as documents that originate from their end. and legible information. but should not be limited to: Information pertaining to date. consistent. Some other data or control features may be required and depend on the type of transaction for which purpose the accounting source document was accomplished. they provide legal proof for possible disputes. in accordance with the double-entry system of bookkeeping. and the name of the issuer. Some source documents contain number sequencing. all copies should contain concise.385 pts ). Edited by Linda Richter Published on Jan 18. the more copies should be available. nature or explanation of transaction. 2011See More About: Accounting An overview about different accounting source documents presents the reasons why they are considered best references for recording business transactions. In addition. Traceability. However.
as supporting documents to the billing statement entries. Credit Card Receipts A credit card receipt is issued aside from the cash receipt generated by the cash register. 3. Find more examples and brief overviews about accounting source documents on the next page. aside from the basic information furnished by this document.1. Monthly credit card statements will also be supported with copies of these receipts. Official Receipts – This document is issued in exchange for monies received and as proof that payment was received or that a monetary condition to pursue a transaction was fulfilled. to be legal. The manner as well as the terms and conditions of payment for the goods are indicated in this document. However. This type of receipt should also be legally produced in accordance with the tax regulations. who will indicate in the printed form his license or printer’s authorization number. Official receipts. Nevertheless. . Sales Invoices Sales invoices are different from official receipts because they merely acknowledge a sales transaction and not the receipt of payment. it is important that these accounting source documents contain features required by the tax regulating body as acceptable proof of payment. the sales invoices should likewise posses the same features found in official receipts in order to be considered as legal. This will be the credit card issuer’s basis for reimbursing the business establishment from where the cardholder purchased the goods or services on credit. Hence. have been printed by a registered printer. certain transactions may result in business disputes in the future. where the sales invoice becomes necessary as proof or evidence. They may be manually issued or electronically produced forms. Inasmuch as cash receipts are used for taxation purposes. the following features should be indicated in order to qualify the document as a legally recognized “official receipt”: It contains the Taxpayer Identification Number (TIN) of the issuer. whether COD or credit terms. 2. The machine that produced the receipt or tape has been registered with the tax regulatory body that regulates the operations of the business.
Purchase Orders In a corporate environment. less than the minimum amounts of purchases or certain cases of emergency shall exempt the procurement from the issuance of purchase orders but all in accordance with the company’s policies. 2011See More About: Accounting go to: page 1 4. Recording of these deliveries should likewise take note of unit prices and terms of payment. They also form part of the accounting source documents used to reconcile any discrepancy between the stock inventory reports generated by a business machine equipped with the perpetual inventory feature against the actual physical count of the goods on hand. all acquisition and procurements for tangible or intangible goods will form part of the company’s assets. They should therefore be supported by a duly approved and pre-numbered purchase order form.385 pts ). are major items considered for determining business performance and profits. Delivery Receipts These documents are the counterpart of the stock inventory release forms. Accounting for stock inventory is very important since inventory costs. included and calculated under the Cost of Goods Sold account. . as they serve as evidence that goods ordered from a supplier were received intact and complete. to ensure that incomplete deliveries or defective goods are properly reported or returned. Stock Inventory Release / Issuance Form These forms are essential as proof that only authorized stocks are taken out of the warehouse or storage rooms. However. This is to ensure that all major purchases are authorized and within the recognized budget. Edited by Linda Richter Published on Jan 18. They should be received by an authorized representative of a company. Henceforth. whether for reselling purposes or as implements of the business. usually in the presence of an internal auditor. all goods coming in or out of the stockroom should be properly documented on a per-item basis. 5. 6.An Overview of Accounting Source Documents (Page 2 of 2) by ciel s cantoria (80.
checks. Checks that have been processed and paid become canceled checks that are returned to its issuer. and deductions that form part of the payroll entry. In addition. Canceled Checks These represent the checks issued by the company to serve as payments for authorized transactions whether for internal or external purposes. Promissory Notes Promissory notes are the best accounting source documents to serve as evidence of obligations or indebtedness. 9. and the receiving teller’s identification and initials will make the deposit slip legal as evidence of the deposit transaction. certain information should be supported by the employees' W4 and Payroll Deductions Authorization forms in order to be considered as a valid basis for accounting entries.Copies of the delivery receipt should also form part of the supporting documents before any billing payments are prepared. 8. Payroll forms for salaries and wages that are manually paid-out also serve as accounting source documents. along with the bank statement for the month that the checks were charged against the account. the signatures of the employees will serve as proof that wages have been paid. They contain pertinent information about terms. the federal and state taxes withheld. maturity . the amount on the face of the check shall be debited or deducted against the issuer’s deposit account. and other cash items recorded as deposits to a bank account are supported with validated deposit slips in order to qualify as accounting source documents. 10. The bank teller’s validation. Once presented to the bank for payment either as an over-the-counter encashment or as a bank clearinghouse item. Payroll . However. 7. the bank’s “Received" stamp. as well as a basis for threshing out any complaints pertaining to salaries paid. They contain the complete details about the total salaries paid. Deposit Slips Cash.
The control officer reviewing and approving the subsequent transactions shall observe it as best practice to check the details of the accounting tickets against the information contained in the promissory note itself.dates. Inasmuch as several transactions will arise out of these particular transactions. and rates of interests and penalty charges. and the ten business forms that have been discussed above are considered as essential for basic. these documents can effectively serve their purposes only if they are properly filed. installment payment schedules. accounting tickets in the form of debit or credit advices are used as accounting source documents for recording purposes. legal. internal control and taxation purposes. Nonetheless. . and stored. indexed. There are numerous business documents that serve as source documents for accounting purposes. amount of debt.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue listening from where you left off, or restart the preview.