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Source Documents in Accounting

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BC: eBook created by Shelly S. Edmunson

FC: Source Documents | Photo courtesy of 401(K) 2012 on flickr.com

1: Objective Evidence The accounting concept objective evidence is applied when a source document is prepared for every business transaction. A source document provides evidence that a transaction occurred. Source document back up the accounting records, such as the journals and the general ledger, and provide evidence in case the business records are audited.

2: Source Documents Source documents are business papers or forms that provide the information necessary to record a journal entry. Every transaction must have a source document that proves that the transaction occurred. A source document includes all the basic information regarding the transaction such as the date of the transaction, to whom the transaction was made, the purpose of the transaction, and the amount of the transaction.

4: Checks A check is a business form ordering the bank to pay cash from the company's bank account to the designated payee. A check is a source document for cash payments.

5: Example Transaction: Paid $800.00 cash to Global Realty Group on November 1, 2012 for November rent.

6: Sales Invoice An invoice is a business form that describes the goods or services sold, the quantity, the price of the goods or services, and the total due including sales tax and/or shipping if applicable. An invoice used as a source document for a sale on account is called a sales invoice. A sales invoice may also be referred to as a sales ticket or a sales slip. A sale on account is a sale to a customer that will be paid for at a later date. A sale on account is also known as a charge sale.

7: Example Transaction: Sold a 10 X 12 Storage shed for $1,200.00, to Gary & Diane Jones on account on November 1, 2012.

8: Purchase Invoice A purchase invoice is a business form that describes the goods being purchased, the quantity, and the price. A purchase invoice is the source document for recording a purchase made on account. A purchase on account is a purchase made from a vendor which will paid for at a later date.

9: Example Transaction: Purchased $270.00 worth of building supplies on account from Franklin Building Supply on November 1, 2012.

10: Receipt A receipt is a business form that gives written acknowledgment for cash received. A receipt is the source document used when cash is received for transactions that do not involve the sale of products or services.

11: Example Transaction: Received $5,000.00 cash on November 1, 2012, from owner, Jake Wilson as an investment in the business.

12: Terminal Summary Most companies use a Point-of-Sale (POS) terminal to collect, store, and report all information regarding its cash sales transactions. A terminal summary is a printed report of all cash and credit card sales. The terminal summary is the source document for recording cash a credit card sales. Some companies may use an electronic calculator to total the amount of cash received from sales. In this case, the calculator tape is the source document for recording daily cash sales.

13: Example Transaction: Cash and credit card sales for November 1, 2010, for $1505.00 in sales, $90.30 in sales tax, for a total of $1,595.30.

14: Memorandum When no other source document is prepared for a transaction a company prepared a memorandum. A memorandum is a business form on which a brief message is written describing the transaction that occurred.

15: Example Transaction: Bought $500.00 worth of office supplies on account from Supply Center on November 1, 2012.

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  • By: Shelly E.
  • Joined: almost 4 years ago
  • Published Mixbooks: 2
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About This Mixbook

  • Title: Source Documents in Accounting
  • Provides examples of accounting transactions and the source documents that provide the information needed to record the transaction.
  • Tags: source documents, receipt, check, memorandum, invoice, purchase order
  • Published: almost 4 years ago

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