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Source Documents

Source documents are business records that provide evidence of financial transactions between two or more parties. Some common source documents include invoices, receipts, payment vouchers, checks, credit notes, and debit notes. These documents are used as the original entry for recording transactions in subsidiary account books. Examples of source documents are invoices (used for credit sales and purchases), payment vouchers (record details of payments made), checks (used to withdraw money from a bank account), and receipts (confirm receipt of money for goods or services sold).

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105 views

Source Documents

Source documents are business records that provide evidence of financial transactions between two or more parties. Some common source documents include invoices, receipts, payment vouchers, checks, credit notes, and debit notes. These documents are used as the original entry for recording transactions in subsidiary account books. Examples of source documents are invoices (used for credit sales and purchases), payment vouchers (record details of payments made), checks (used to withdraw money from a bank account), and receipts (confirm receipt of money for goods or services sold).

Uploaded by

Nurudeen Jiomh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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SOURCE DOCUMENTS

INTRODUCTION

The preparation of different books of accounts including the subsidiary books by accountant rely
on some known and widely accepted documents that are exchanged between two or more parties
in the conduct of business transactions. These documents that buyers and sellers exchanged
between each other which are binding on both parties are called source documents in accounting.

SOURCE DOCUMENTS AND ITS USES

Source documents are business documents confirming the occurrence of financial transaction
between two or more parties. Source documents are written financial information exchange
between two or more parties as a result of engaging in business transaction. These documents are
used for the first entries in the subsidiary books of accounts. Source documents include invoices,
receipts, debit notes, credit notes, payment vouchers, cheque books, clock cards, time sheets and
bank tellers.

Types and uses of source documents are discussed below.

Invoice

This is a document that shows the transfer of goods and/or provision of service between two or
more parties for which payment is yet to be received. Invoice under normal circumstance is
meant for credit transactions which include credit sales and credit purchases. However, many
sole traders do not know the function of an invoice to the extent that all their sales (cash and
credit) are documented using invoice. Invoices are recorded in sales day book or purchases day
book depending if it is sales invoice or a purchases invoice.

Payment Voucher

This is a document that is used to record full details of money paid for a particular purpose. It
shows that money has left a particular account to another party or for the settlement of financial
obligation. Payment voucher will contain the name of the receiver, amount paid, purpose of the
payment, date of payment, mode of payment – cash or cheque, signature of the receiver, name
and signature of the approving authority.
Cheque

A cheque is a negotiable instrument that originates from banks and it is used to withdraw money
from a stated bank account in a bank. A cheque usually contains the name of the bank account
holder, the account number, the branch of the bank where the bank account is domiciled or
opened, the name of the bank, the date for the payment of the cheque, a place for the owner’s
signature, and amount to be withdrawn in words and figure.

Receipt

This is a document confirming the receipt of money for goods and service sold or bought.
Receipts are used in recording the cash book since it is an evidence of cash and cheque
transactions. A receipt usually contain the name of the payers, amount paid, date of payment,
purpose of payment, signature of the receiver.

Bank Teller

This is a document that emanate from the bank because a bank teller is used to pay or lodge
money (cash and cheques) into an account in a bank. It serves as evidence that a payment has
been made or lodged into a particular account with a stated branch of a bank. Bank teller will
contain the name of the depositors, account to which deposit is made, the name of the bank
account holder, amount deposited in words and figure, date of the deposit, serial number of the
teller, signature and stamp of the bank official that collected the deposit on behalf of the bank.

Credit Note

Credit note is a document showing a claim or refund in favour of the receiver. It is used to
correct overcharge on an invoice, allowance for minor damages to goods, and refund on goods
returned.

Debit Note

A debit note is a source document that is used when a customer’s account is to be increased, and
to establish costs against the recipient. It therefore means that a debit note will be used to effect
correction when a customer/purchaser has been undercharged for goods and/or services.

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