Documents that are used for Business Transactions

and their Format [Notes with PDF]

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January 18, 2020

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In this article, we will learn in-depth about the documents that are used for business
transactions and their format, and much more.

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What are the Sources of Business Transactions and Related

Documents?
 
In modern business, there are endless transactions happening every day. The
transactions must be properly saved in order to determine the correct business outcome.
 
One or more documentary evidence is shown in support of each transaction. These carry
the evidence of transactions.
 
For Example, Any business person can make multiple transactions within one day.
Goods sold, goods Purchased, return of purchased goods, return of sold goods,

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depending on money or withdrawing the same in a bank are such transactions may occur
regularly in a business.
 
In addition, these events are actually the main source of transactions. It is impossible to
memorize transactions made during the whole calendar year. The transactions are
therefore to be recorded correctly in the account books.
 
Whenever an accountant wants to record the transactions, they must prepare such
documents. These documents are vouchers, Cash Memos, Bills, Debit Notes, Credit
Notes, VAT invoices, Vouchers, etc.
 
There are two types of documents that are widely used for business transactions.
i. Primary Documents 
 
The document that is obtained from the source as soon as the transaction takes place is
called the primary document of the transaction. The primary documents are 
1. Invoice
2. Cash Memo
3. Debit Note
4. Credit note 
5. Vat Invoices

 
ii. Final Documents 
 
The final document of the transaction is the voucher. The final document or voucher is
made based on the primary document. However, there is no primary document for journal
vouchers. This is because journal vouchers are only needed for cashless transactions.
Final Documents are
1. Debit Voucher
2. Credit Voucher
3. Journal Voucher

Documents that are used for business transactions are presented below

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The explanation, Specimen copy and use of these documents are described here.
 
 
Primary Documents:
1.Invoice
 
Invoice is documentary evidence of the purchase and sale of goods. When a sales
representative sells goods, he delivers a written document mentioning the full details of
the goods in it. This written document is called an invoice. 
 
Buyer’s name & address, Quantity of goods, Description of goods, the value of goods and
terms of payment, etc. are mentioned in the invoice. 
 
Seller considers it as an outward invoice and buyer as an inward invoice. On behalf of
this invoice, a buyer prepares a purchase Journal and a seller prepares the Sales
Journal.
 
Sample of Invoice
 

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2. Cash Memo 
 
A Cash memo is given at the time of cash sale. Usually, the seller gives his customer a
cash memo. Usually, the name and the address of the shop are written on top of the cash
memo. 
 
Referring to the name of sold goods, quantity, rate, total value, net value, commission,
etc. a seller hands over the cash memo to a buyer with his signature. The cash memo is
generally prepared in triplicate.
 
Sample of Cash Memo
 

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3. Debit Note: 
 
If the products purchased are returned to the vendor because of the lower quality or
because the order letter does not comply with them, the buyer shall write up a note
specifying the quantity and cost and value and the reasons for the product’s return. 
 
The note is then sent to the seller along with the goods and the supplier is informed of
this note that his account has been debited with that amount due to those returned goods.
This note is called a debit note. Usually, the Buyer prepares a debit note.
 
Sample of Debit Note
 

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4. Credit Note: 
 
When the seller receives the returned goods from the purchaser, he sends a note to the
purchaser indicating the amount, value, etc. of the goods identified and tells the
purchaser that his account has been credited with the value of the returned goods. This
note is called a Credit Note.
 
Sample of Credit Note
 

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5. VAT Invoice:
 
Value Added Tax or VAT is a tax on the value of goods or services taxable by a person
or organization. 
 
The government collects VAT from the product dealer or service provider. In accordance
with the law, the seller of goods prepared a VAT invoice as a predefined government
format.
 
Sample of VAT Invoice
 

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Final Documents
1. Voucher
 
The documentary evidence, which is used for transactions, is known as a voucher. For
Example, the seller gives a voucher to its buyer for goods sold $3,000. Again, a property
owner gives a voucher to its tenants after receiving rent $ 500.
The voucher is of two types. They are:
 
1.1  Debit Voucher
1.2  Credit Voucher
1.1 Debit Voucher
 
A debit voucher is used for the purchase of goods and for various types of expenses. It is
recorded in the payments side of the cash book or cash register attaching an invoice, a
cash memo with a consecutive serial number.
 
Sample of Debit Voucher
 

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1.2 Credit Voucher
 
The voucher which is used for the sale of goods and income received, is called a credit
voucher. After attaching the invoice, Cash memo, etc. with the credit voucher, it is
recorded with a consecutive serial number on the debit side (Receipts side of Cashbook).
 
Sample of Credit Voucher
 

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2. Journal Voucher 
 
A journal voucher is used to record all types of transactions. Therefore, vouchers in
which cashless transactions are recorded are called journal vouchers.
 
The journal voucher mentions the voucher number in the specific cell of the ledger so
that you can find the voucher for future references. Some examples of cashless
transactions are depreciation, asset depreciation, unpaid debt reserves. 
 
Sample of Journal Voucher
 

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