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Source Documents

Uploaded by

glowzy2120
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Source Documents

This shows the evidence transactions. They are collected, filed and posted in
the books of prime entry. Example, if a firm sells goods on credit, then an
invoice is raised. The source documents as shown in the above include:

 Sales invoice
 Purchases invoice
 Credit note
 Debit note
 Receipts, cheques and petty cash vouchers  Other
correspondences.

(i) Sales Invoice


The sales invoice is raised by the firm and sent to the debtor/customer
when the firm makes a credit sale.
The sales invoice contains the following:
i. Name and address of the
firm
ii. Name and address of the
buying firm
iii. Date of making the sale –
invoice date. iv. Invoice
number
v. Amount due (net of
trade discount)
vi. Description of
goods sold vii.
Terms of sale.
(ii) Purchases Invoice
A purchase invoice is raised by the creditor and sent to the firm when
the firm makes a credit purchase. It shows the following:
i. Name and the address of the creditor/seller
ii. Name and address of the firm
iii. Date of the purchase (invoice date)
iv. Invoice number
v. Amount due
vi. Description of goods sold vii. Terms of sale

(iii) Credit note


A credit note is raised by the firm and issued to the debtor when the
debtor returns some goods back to the firm. It’s contents include:
i. Name and address of the firm
ii. Name and address of the debtor
iii. Amount of credit iv. Credit note number
v. Reason for credit e.g. if goods sent but of the wrong type.
The purpose of the credit note is to inform the debtor or customer that
the debtor’s account with the firm has been credited i.e. the amount due
to the firm has been reduced or cancelled.
The credit note may also be issued when the firm gives an allowance of
the amounts due from the debtors. From the context we can assume that
all credit notes are issued when goods are returned.

(iv) Debit note


This is raised by the creditor and issued to the firm when the firm
returns some goods to the creditor. It includes the following items:
i. Name and address of the firm
ii. Name and address of the creditor
iii. Amount of debit
iv. Debit Note number
v. Reason for the debit
The purpose of the debit note is to inform the firm that the amount
due to the creditor has been reduced or cancelled.

The The
Firm Credit sales (sales invoice)
Debtor
Returns inwards (credit note)
Credit purchase (purchase invoice)
The
The Creditor
Firm
Returns outwards (debit note)

(vi) Receipts
A receipt is raised by the firm and issued to customers or debtors
when they make payments in the form of cash or cheques. It shows:

i. The name and address of the firm


ii. The date of the receipt
iii. Amount received (cash or cheque or other means of
payment)
iv. Receipt number.

Cheques
When a firm opens a current account with the bank, a chequebook
containing cheques issued. The cheques allow the firm to make
payments against the account with the bank. When a firm issues a
cheque to its creditors for payments, it authorizes the bank to honour
payments against the firm’s account with the bank. The cheque contains
the following information:
i. Name and account number of the firm (account holder)
ii. The date of the cheque
iii. Name of the payee (creditor)
iv. Name of the firm’s bank
v. Amount payable in words and figures
vi. The cheque number vii. The authorized signature(s)

Petty cash vouchers


A petty cash voucher is raised by a cashier to seek authority for
payments (payments of small value in the firm which require cash
payments e.g. fuel, bus-fare, office snacks), which is approved by a
senior manager and filed for record purpose. It shows:
i. Date of payment
ii. Amount paid
iii. Reason for payment
iv. Authorized signature(s):
v. Person approving
vi. Person receiving
The person receiving the money must then return a document
supporting how the money was utilized e.g. fuel receipt, bus ticket e.t.c.
(vii) Other correspondence
These include information received within or outside the firm
that has a financial implication in the accounts. Examples are:

i. Letters from the firm’s lawyers about a debtors balance.


ii. Hire-purchase/credit sale or credit purchase agreements
that relate to non- current assets. iii. Memorandum from a
senior manager requiring changes to be made in the
accounts.
iv. Bank statement from the bank, e.g. bank charges.

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