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Form 1 Accounts Notes 3

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27 views

Form 1 Accounts Notes 3

Uploaded by

mikelchipere
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Form 1 Notes No 3

Source documents.

A source document is a written or printed statement which provides details of a


transaction such as date of the transaction ,the amount paid or received etc.
The source documents provide proof of the occurrence of a transaction.

Importance of source documents


Source documents are important because they:
 Are used as the original source of accounting information when preparing
accounting records
 Provide documentary proof of a transaction having occurred
 Provide an accurate record of what has been bought or sold by the business

Types of source documents


(a) Receipts
It is a source document used for recording cash received from customers.
The receipt is used as a source document when entering transactions in the Cash book.

(b) The Invoice


 It is a document issued by the supplier of goods on credit showing details ,
quantities and prices of goods supplied.
 It is issued whenever when a person sells goods on credit terms to another and the
document becomes a contract of the sale of goods.
 The invoices contain the following information
(I) The name and address of the supplier
(II) The name and address of the customer
(III) The date
(IV) Full details ,quantities and prices of the goods supplied
 When the invoice is originating from a seller (sales invoice) and the buyer
receives a purchases invoice.
 An invoice is a source document for Sales Journal( Sales Day Book) and
purchases Journal ( Purchases Day book).
© The debit note
 It is document issued by a purchaser of goods on credit to request a reduction in
the invoice received.
 It is a source document used for recording purchases returns and allowances .
 The goods may be returned or an allowance given due to:
(i) Goods bought on credit being unsatisfactory and are returned to the supplier
(ii) Goods were damaged or partly unsatisfactory but the buyer still retains them

Other uses of a debit note


A debit note may be issued by a seller to a buyer to correct an undercharge which may
have arisen due to:
 An invoicing error that resulted in undercharging the customer
 Sending too many goods than ordered by a customer
 Charges such as transport costs which arise after the invoice has already been
supplied.
(d)Credit note
 It is a document issued by a seller of goods on credit to notify of a reduction in an
invoice previously issued.
 It is a source document used for recording sales returns and allowances. Sales
returns are goods returned by customers.
 Sales returns and allowances occur due to:
(i) Unsatisfactory goods supplied to the buyer
(ii) The goods being damaged or partly unsatisfactory but the buyer still retaining
them and being given an allowance.
 A credit note may be sent by the seller to the buyer for the following reasons:
(i) An invoicing error may have been made resulting in the customer being
overcharged - a credit note will be used to reduce the extra charge made
(ii) To refund the customer who returned packaging material or crates where deposits
where deposit is chargeable.

(e ) The Voucher
 It is a document used to authorise any cash payment
 Petty cash voucher are mostly used to support all petty cash payment from the
petty cash fund.
 The voucher provides evidence for writing up a Petty Cash book

(f) Statement of account


 It is a document issued by the seller of goods on credit to summarise the
transactions for the month
 It contains the following information
(i) The name and address of the supplier
(ii) The name and address of the buyer
(iii) The date
(iv) The balance owing at the start of the period
(v) Invoices and credit notes issued
(vi) Payments received
(vii) Any cash discounts allowed
(viii) The balance owing at the end of the period
 The statement of account is a source document for interest charged on the
outstanding debt.

(g)Bank Statement
 It is a summary of a customer’s account at the bank.
 The bank statement is a source document for transactions processed by the bank
but are not recorded in the Cash book.

(h) Cheque counterfoil


 A cheque counterfoil is that part of a cheque that remains attached to the cheque
book after the cheque has been issued for payment.
 It is a source document for the Cash book

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