Fundamentals of SENIOR

Accountancy, Business HIGH

SCHOOL
and Management 1 (FABM 1)

Self-Learning

Source Documents used in Module

9
Merchandising Business
666
Quarter 4
Fundamentals of Accountancy, Business and Management 1
Quarter 4 – Self-Learning Module 9: Source Documents used in Merchandising
Business
First Edition, 2020

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 Fundamentals of
SENIOR
Accountancy, Business HIGH
and Management 1 SCHOOL

(FABM 1)

Self-Learning

Source Documents used in

Module

9
Merchandising Business
12
Quarter 4
Introductory Message
For the facilitator:

Welcome to the Senior High School – Fundamentals of Accountancy,

Business, and Management 1 Quarter 4 Self Learning Module on Source Documents
used in Merchandising Business!

This Self-Learning Module was collaboratively designed, developed, and

reviewed by educators from the Schools Division Office of Pasig City headed by its
Officer-in-Charge Schools Division Superintendent, Ma. Evalou Concepcion A.
Agustin, in partnership with the City Government of Pasig through its mayor,
Honorable Victor Ma. Regis N. Sotto. The writers utilized the standards set by the K
to 12 Curriculum using the Most Essential Learning Competencies (MELC) in
developing this instructional resource.

This learning material hopes to engage the learners in guided and independent
learning activities at their own pace and time. Further, this also aims to help learners
acquire the needed 21st-century skills especially the 5 Cs, namely: Communication,
Collaboration, Creativity, Critical Thinking, and Character while taking into
consideration their needs and circumstances.

In addition to the material in the main text, you will also see this box in the
body of the module:

Notes to the Teacher

This contains helpful tips or strategies that
will help you in guiding the learners.

As a facilitator, you are expected to orient the learners on how to use this
module. You also need to keep track of the learners' progress while allowing them to
manage their learning. Moreover, you are expected to encourage and assist the
learners as they do the tasks included in the module.
For the learner:

Welcome to Fundamentals of Accountancy, Business and Management 1

Quarter 2 Self Learning Module on Terminologies used in Merchandising Business!

This module was designed to provide you with fun and meaningful
opportunities for guided and independent learning at your own pace and time. You
will be enabled to process the contents of the learning material while being an active
learner.

This module has the following parts and corresponding icons:

Expectations - This points to the set of knowledge and skills

that you will learn after completing the module.

Pretest - This measures your prior knowledge about the lesson

at hand.

Recap - This part of the module provides a review of concepts

and skills that you already know about a previous lesson.

Lesson - This section discusses the topic in the module.

Activities - This is a set of activities that you need to perform.

Wrap-Up - This section summarizes the concepts and

application of the lesson.

Valuing - This part integrates a desirable moral value in the

lesson.

Posttest - This measures how much you have learned from the
entire module.
 EXPECTATIONS

After going through this module, you are expected to:

1. identify and familiarize the most commonly used source documents in

merchandising business;
2. know how to fill out the form; and
3. know the importance of source documents.

PRETEST
Directions: Write true if the statement is correct and false if it is wrong.

_____1. Statement 1: Source document captures the key information about a

transaction.
Statement 2: Source documents track the history of the business’s accounting
records.
A. Only statement 1 is correct.
B. Only statement 2 is correct.
C. Both statements are correct.
D. Both statements are incorrect.
_____2. Statement 1: Source document is the origin of the information that is
recorded into the accounting books.
Statement 2: Source document is the origin of the information that is taken
from the accounting books.
A. Only statement 1 is correct.
B. Only statement 2 is correct.
C. Both statements are correct.
D. Both statements are incorrect.
_____3. The document issued with a sale is…
A. Recorded by the seller as a purchase invoice
B. Recorded by the seller as a check
C. Recorded by the seller as a sales invoice
D. None of the above
_____4. What should be done with the source documents?
A. They should be filed away and kept for at least 5 years
B. Shredded for privacy as soon as possible
C. Given to the bank
D. None of the above
_____5. What common about source documents?
A. The bookkeeper’s name, the amount, a transaction date, a reference
number
B. The amount, the names of both businesses, a date, a description of
the transaction.
C. A transaction date, the amount, a description of the transaction, the
document shape.
D. None of the above
 RECAP

Directions: Write the correct letter of your answer in the space provided.
_____1. The purchases of G have a list price of P250,000; terms 10/5; n/30. To record
the purchase, the journal entry would be
A. Debit Purchases, Credit Accounts Payable
B. Debit Accounts Payable, Credit Purchases
C. Either A or B
D. Neither A nor B
_____ 2. M is selling a list price of P80,000; 10/5; 1/30; n/60. To record the sales
the debit
A. Debit Sales, Credit Accounts Receivable
B. Debit Accounts Receivable, Credit Sales
C. Either A or B
D. Neither A nor B
_____ 3. (True or False) Generally, sales are recorded only when the sale is on a cash
basis.
_____ 4. Which company would most likely use a periodic inventory system?
A. Toyota
B. Camella Homes
C. SM Hypermarket
D. Honda
_____ 5. Which is not a contra account?
A. Freight In
B. Purchase Returns and allowances
C. Sales Discount
D. Sales Returns and Allowances

LESSON

In the accounting industry, source documents include receipts, bills,

invoices, statements, checks – i.e., anything that documents a transaction. Any time
a business spends or receives money, a source document is created. Source
documents are an integral part of the accounting and bookkeeping process.
(https://content.hubdoc.com/hubdoc-blog/source-documents-
bookkeeping#:~:text=In%20the%20accounting%20industry%2C%20source,the%20accounting%20and%2
0bookkeeping%20process.)

A source document captures the key information about a transaction, such

as the names of the parties involved, amounts paid (if any), the date, and the
substance of the transaction. Source documents are frequently identified with a
unique number so that they can be differentiated in the accounting system. The
pre-numbering of documents is particularly useful since it allows a company to
investigate whether any documents are missing.
(https://www.accountingtools.com/articles/what-are-source-documents-in-accounting.html)

SOURCE DOCUMENTS IN A MERCHANDISING BUSINESS

➢ Also known as Business Documents
➢ Provides evidence that a business transaction had occurred.
➢ It tracks the history of business’s accounting records

THE 7 IMPORTANCE OF SOURCE DOCUMENTS (https://sbaccounting.com.ng/here-

are-7-functions-of-source-documents)

Here are the 7 important functions of the source document:

1. Evidence of payment: A source document shows evidence that a particular

transaction or an event had occurred in the past.

Illustration: A way to explain it is from the aspect of the purchase of

equipment. After buying one for the business, for management to
confirm the amount spent, a source document must be presented by
the individual responsible for buying it.

2. Record to the books of accounts: It is from the source documents records

are made directly to the book of accounts or chart of accounts as it is called
in recent times.

In the above illustration of the purchase of equipment, a copy of the

source document will be given to the cashier in charge (if bought for
cash), who will record the data into the cash book.

3. To perform an audit trail: Source documents are used to perform an audit

trail. When auditors are examining the procedures followed to arrive at a figure
in a source document, the auditors will follow a trail to the source document
or from the source document to the financial statement.

4. It eases the job of auditors: Keeping a regular record of source documents

eases the job of auditors. As explained above, auditors carry out trials on the
source document of a firm. When there is no source document for a particular
line item in a financial statement. This makes it difficult for auditors to form
a qualified opinion.

5. Future References: Source documents serve as a future reference to the

business on an event that happened in the past. For example, when the
evidence is required by management or other users, such a document can
serve as a reference.

6. Avoiding fraud: An important function of the source document is its ability

to form a basis for avoiding fraud. It can also be used to catch a thief. In a
nutshell, it will serve as evidence that money was stolen.

7. It is used for control purposes: A source document can be used as an

internal control tool for a business. With it, errors can be detected in the books
of account. If a proper procedure of how cash and other financial resources
should be handled are put in place, the source document can perform magic.
 Loopholes will be easily detected and the coalition to commit a crime by
employees can be avoided.

COMMONLY USED DOCUMENTS:

1. Purchase Invoice
2. Sales and Purchase orders
3. Delivery Receipts
4. Debit and Credit memoranda
5. Vouchers
6. Official receipts

1. PURCHASE INVOICE OR BILL

➢ Issued by the seller to the buyer to indicate that merchandise has been
delivered. Basis of recording sales revenue on the seller’s book (sales
invoice) and purchases on the buyer’s book (purchase invoice)

CONTENT OF A SALES INVOICE

Name and contact details of the seller
Tax details of the seller
Word “INVOICE”
Date of invoice
Credit terms
Name and contact details of the buyer
Units of measure for goods delivered

8 Number of units delivered

Description of goods
Total amount of goods

Unit selling price of goods

Authorized Signature

Invoice Number

Figure 9.1. Sales Invoice

2. SALES ORDER
➢ prepared when the buyer informs the seller that he wants to buy from
the seller through purchase order

❖ If the buyer does not prepare a purchase order. The sales order only
includes the following:
a. name and contact details of the buyer
b. description of goods
c. a number of unitsordered.
 Customer #
Sellers’s Details
Credit terms
Buyer’s Details Name of Salesperson
(for commission
Order# purposes
Number of units ordered

Details of goods ordered

(description, quantity, price
per unit and its total amount)

Signatory of approving person

Date prepared

Figure 9.2. Sales Order

3. DELIVERY RECEIPT
➢ document issued by the seller to confirm if merchandise has been
delivered to the billing address
CONTENT OF A DELIVERY RECEIPT
Name and contact details of the seller
Tax details of the seller
Word “DELIVERY RECEIPT”
Date of the receipt
Credit terms
Name and contact details of the buyer
Number of units delivered
Unit of measure for goods delivered
Description of goods delivered

Authorized buyer’s signature

Delivery Receipt Number

Figure 9.3. Delivery Receipt

4. DEBIT AND CREDIT MEMORANDUM:
a. CREDIT MEMO: A transaction that reduces Amounts Receivable from a
customer eg. The customer could return damaged goods.

▪ Credit memo request is a used in complaints

If the price calculated for the customer is too
high

b. DEBIT MEMO: is a transaction that reduces Amounts

Payabletoavendorbecause;yousend damaged goods back
to your vendor.

▪ Debit memo request is used in complaints If the

prices calculated for the customer were too low.

See sample below.

Figure 9.4. Credit and Debit memoranda

5. PAYMENT VOUCHER
➢ Attached to supporting documents that require payment (invoice, company’s
purchase order, and other information needed to process the seller’s invoice
for payment)
➢ An internal document is used in a company’s accounts payable to collect the
necessary documentation and approval before paying a seller’s invoice.

CASH VOUCHER: approval of payment in cash

CHECK VOUCHER: approval of payment in check

 Company or Business Name

Company’s details

Company’s logo
Word “VOUCHER”
Voucher No.
Voucher Date
Description of Transaction
sometimes includes Journal entries
Payee

Invoice No. & Date

Cheque No & Date

Amount in words & figures

Signatories

Signature of receiving person

Figure 9.5. Payment Voucher

6. OFFICIAL RECEIPT
➢ Acknowledges the receipt of cash or check.
➢ Used by the collecting party as evidence of payment
➢ Required by the BIR. Failure to issue this may lead to an understatement of
revenues which is the basis of tax evasion.
 Name and contact details of seller
Tax details of seller

Tax details of seller

Date of receipt

Tax details of seller

Details of the merchandise bought

Amount in words and figures

Authorized signature

Receipt number

Figure 9.6. Payment Voucher

Take note: Details on each of the source documents depend on the nature of the
business but important details such as the date and Official No. in Official receipt
appear also on the other businesses’ source documents.
 ACTIVITIES

Activity 1
____________________________
(1)
____________________________ SALES INVOICE
____________________________ (2)
_______

(4)
Sold To ________________________
(3) Date: _________________
Address ________________________ (5)
Terms: ____Cash______

Quantity Description Unit Price Amount

(6) (7) (8) (9)

(10)
Received the above items
in good condition .

______________________
Customer's Sigature
Requirement: Replace the numbered blanks with the appropriate information.

Sales Invoice No. 001 Anthonette Mae Gonzales Cash

March 1, 2021 Sales Invoice No. 001 Ideal Bazaar

TIN: 0000-987-654-321
Macanaya, Aparri, Cagayan
2 units EPSON
printer L3150 at
P8,970 each

WRAP-UP
To summarize what you have learned from the lesson, answer the following
questions:

1. discuss the importance of source documents; and

2. enumerate commonly used source documents and describe each.

 VALUING

Reflect on This!

Case 1: Marisol Perez, a pharmacist, opened a drugstore in Cubao. She

sells only on cash basis but buys on account from leading laboratories.
She would like you to advise her on the need to use special journal and
ledgers.________________________________________________________________
________________________________________________________________________
________________________________________________________________________

POSTTEST

Directions: Identify each item below. Write your answer before the item number.

_____1. Issued by the seller to the buyer to inform that his account has been debited
in the seller’s books of accounts. (increase debt)
Invoice
A. Purchase Order
B. Credit Notes
C. Debit Notes
D. Delivery Notes
_____ 2. Identify the source document.
A. Sales Invoice
B. Memorandum
C. Sales order
D. Purchase invoice

_____ 3. (True or False) Memorandums can be used to make corrections.

_____ 4. If you receive a sales invoice, which transaction would you select?
A. Sold services on account
B. Received cash for sales
C. Sold services for cash
D. A sales invoice can be used for anything
_____ 5. Issued by the seller to the buyer to inform the buyer that his account has
been credited in the seller’s books of accounts (reduce debt.)
A. Delivery Notes
B. Credit Notes
C. Debit Notes
D. Purchase Order
 KEY TO CORRECTION

A 5. 5. B
5. B C 4. 4. A
4. A False 3. 3. TRUE
3. C B 2. 2. A
2. A A 1. 1. C
1. C POSTTEST
PRETEST RECAP

References

Ballada, W. 2017. Fundamentals of Accountancy, Business, and Management 1.

VDomDane Publishers.

Banggawan, RB. Asuncion, DJ. 2017. Fundamentals of Accountancy, Business, and

Management 1. Real Excellence Publishing.

Ferrer, RC. Millan, CV. 2017. Fundamentals of Accountancy, Business, and

Management 1. Bandolin Enterprise. San Juan, DA. 2018. Fundamentals
of Accounting. Elmoer Publishing

Rabo, JS. Tugas,FC.Salendrez, HE. 2016. Fundamentals of Accountancy, Business,

and Management 1. Vibal Group Inc.

Manuel, Zenaida Vera-Cruz 18th Edition Accounting Process_Basic Concepts and

Procedures

Epstein, Lita, MBA Bookkeeping Workbook for Dummies. Wiley Publishing, Inc.

Hernane, Milagros B.,et.al 2014. Principles of Accounting. Allen Adrian Books Inc.

Valencia, Edwin G. 4th Edition. Basic Accounting (Concepts, Principles, Procedures and
Applications) . Valencia Educational Supply