Source Documents in Accounting: Definitions, Examples, and Uses

What is a source document?

A business paper from which information is obtained for a journal entry.

What are the objectives of a source document?

To provide objective evidence of the accounting transaction and verify accuracy of entries.

What are examples of source documents?

Receipt, check, memorandum.

What are the advantages of pre-numbered documents?

They ensure all documents are accounted for, identify missing documents, track referenced source documents, and reduce unauthorized transactions.

What is a check?

A business form ordering a bank to pay cash from a bank account.

What is objective evidence of a payment by check?

It includes the dollar amount, payee, account balance, amount deposited, and purpose of the payment.

What is a sales invoice?

An invoice used as a source document for recording a sale on account.

What characteristics does a sales invoice have?

It shows the heading from the business, sold to customer, terms of sale, and description of services provided.

What is a receipt?

A business form giving written acknowledgment for cash received.

What are the characteristics of a receipt?

It includes the amount of money received, purpose of the money received, receipt number, and who the money is received from.

What is a memorandum?

A form on which a brief message is written to describe a transaction.

When is a memorandum used?

When there is no other source document available, an additional explanation is needed, or a correcting entry is needed.

What is the purpose of receipts?

To document cash received from sources other than sales.

What is a calculator tape?

A document printed from the cash register or terminal as proof of cash sales.

What is the difference between receipts and calculator tapes?

Receipts do not need to be generated from a sale, while calculator tapes are only generated from sales.

What is the purpose of a sales invoice?

To record a sale on account.

What is the difference between sales invoices and calculator tapes?

Sales invoices are prenumbered and used for recording sales on account, while calculator tapes are not prenumbered and used for cash sales.