Introduction Source documents are the physical basis upon which business transactions are recorded.

orded. They usually contain: A description of a business transaction The date of the transaction A specific amount of money There may also be an authorizing signature Many source documents are also stamped to indicate an approval, or on which to write down the current date or the accounts to be used to record the underlying transaction. Source documents are typically retained for use as evidence when auditors later review a company's financial statements, and need to verify that transactions have, in fact, occurred. A source document does not have to be a paper document. t can also be electronic, such as an electronic record of the hours wor!ed by an employee, as entered into a company's time!eeping system through a smart phone. "oth businesses #or people$ involved in the transaction will get a copy of the accounting source document produced. %very document has a few things in common:& Quotes The buyer may re(uire a (uote from different sellers for the items it wants to buy. The (uotes will be loo!ed at, discussed and a decision made as to which seller to buy the The transaction date The amount The name of both businesses'people A reference number A description of the transaction

Types of Accounting Source Documents

product from, usually based on who is the cheapest. After that an order will be placed and the winning supplier will turn the (uote into a sales invoice. Orders )hen a business needs to buy an item it will complete an order form. The order form may be as simple as an A* sheet from a duplicate boo!, or it may be a form supplied by the seller through its on&line website or catalogue. +rder forms will not always show the cost because the buyer may not !now the cost when placing an order. Delivery Dockets n many cases the vendor will provide a delivery doc!et with the items being shipped, posted or delivered. These will often have a description of items being delivered so the buyer can chec! it against their order immediately upon it's arrival. Sales and Purchase Invoices )hen an item is sold the seller will issue a document providing all the details of the sale. f the seller does not e,pect cash up front before sending the item, they will state on their invoice their payment terms i.e. the length of time the buyer has until it-s time to pay. +ne e,ample is for payment to be received no later than ./th of the month following the date of invoice. The seller enters the document into their system as a sales invoice. The buyer will enter it into their system as a purchase invoice.

Credit and Debit otes f the buyer decides not to !eep an item but return it to the seller, the seller will issue a special note to show the amount to be refunded. n the supplier-s boo!!eeping system this is called a credit note because it reduces the amount owed by the customer. n the customer-s boo!!eeping system it is called a debit note because it reduces how much they owe to the seller. Payment!"emittance Advices )hen a customer pays their bill they will send the supplier a remittance advice which details the amount and the invoice numbers being paid. t will be posted either with the chec! or by itself if payment is made by internet ban!ing.

0emittances can often be found already printed as a small cut out section at the bottom of, or down the right hand side of, the sales'purchase invoice. Checks #Che$ues% A chec! #che(ue$ is a special ban! note that represents the cash that is being paid by the customer. The chec! re(uires the signature of the person who is an authorized signatory of the ban! account from which the chec! is issued. %ach chec! has a special number on it which should be recorded into the boo!!eeping system. The name of the payee should be written on the chec!. f it is left blan! anyone can fill it in with their own name and deposit the chec!, thus stealing the money. 1hec!s should be crossed across the top with the words 2not negotiable-, and the printed words 2or bearer- crossed off #not all chec!s have this$ so that the chec! has to be deposited into the payee-s ban! account and not cashed, thus avoiding theft. "eceipts +nce the customer has paid their bill, the supplier can issue a receipt. A receipt is proof that the payment has been made, which is a good idea when paying cash. 0eceipts are usually automatically provided when buying something from a shop. Deposit Slip )hen a customer pays by che(ue or cash, the seller will write a ban! deposit slip which will be ta!en to the ban! and presented together with the che(ues and cash. The deposit slip will show the total amount being deposited plus a brea!&down of the che(ue amounts and cash. The ban! will ma!e a record of the payment so that it shows up on the payor-s ban! statement as a payment received, and on the customer-s ban! statement as a payment made. Other Accounting source documents may include loan or lease agreements with attached payment summaries that show the total amount due plus interest and administration fees. &iling the Documents

t is vital that all accounting source documents are filed in such a way that they are easy to retrieve at a later date in case of any (ueries that might pop up. The most common method is to file everything in date order, then alphabetical order. Most ta, departments will re(uire you to maintain a good office filing system for at least * or 3 years. Common Terms 4ayee & person or business being paid 4ayer & person ma!ing the payment Seller & supplier #payee$ "uyer & purchaser5 customer #payor$

Conclusion 6arious regulations mandate that some source documents be retained for a number of years. t also may be prudent to retain these documents irrespective of regulations, if only to provide evidence in the event of a lawsuit, or to provide better customer service. 7or these reasons, a company should adopt a document destruction policy that strictly controls the shredding or other form of elimination of source documents.