Source of

Document
Prepared by:
Norzakiah bt Mohamed Bakhari
Tourism and Hospitality Department
Politeknik Tuanku Syed Sirajuddin
 Learning Outcome!
1. Demonstrate knowledge and 3. Explain the documents used during
understanding of source documents business activity:
in business activities. a. Delivery note
2. Explain the documents used before b. Invoice
business activity:
4. Explain the documents used after
a. Enquiry letter business activity:
b. Response letter a. Cheque and Cheque Butt
c. Order form b. Receipts and Cash Vouchers
c. Debit Notes
d. Credit Notes
e. Account Statements
f. Memo

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 WHAT IS SOURCE OF
DOCUMENT?
Let’s think !

3
 “
A source document is a basic material or
evidence used for recording purposes.
When a transaction occurs, a source
document will be created.

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 …

Cash Transactions Credit Transactions Other

Cash receipt Sales invoice Memo

Purchase Statement of
Cheque butt
invoice account

Enquiry Letter

Quotation/
Response
Letter
Types of source documents
Order Form
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 WHO PREPARE
SOURCE OF
DOCUMENT?
Let’s think !

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 In every transaction there is an original and a copy of the source document

Buyer Seller

Original

Copy

The seller always issues the

The buyer always gets the
document and gets a copy of
original source document
the source document

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 WHY PREPARE
SOURCE OF
DOCUMENT?
Let’s think !

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 The purpose of source document is:

◆ To save the records of transaction happen between

purchaser and seller.
◆ As an evidence that the business activities happen
between customers on that date.
◆ As a source document for accounting record.

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 Reliability:

Information is reliable if it:

• Is free from error, bias, personal opinions and estimates

• Is based on data that can be checked or verified

• Has a source document to verify it

Statements of
Receipts Cheque Butts Invoices Memos
Accounts

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 WHEN TO PREPARE SOURCE
OF DOCUMENT?
Let’s think !

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BUSINESS TRANSACTION
• Cheque & cheque butt
• Receipts & cash
voucher
• Enquiry letter During • Account statements
• Response letter • Memo
• Delivery note
• Order form • Debit notes
• Invoice
• Credit notes

Before
After
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BEFORE BUSINESS
TRANSACTION

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 Enquiry Letter

◆ Send by the purchaser to the

supplier.
◆ Letters of enquiry describe
what the writer wants and why.
◆ The purpose of enquiry letter is
to know the details about the
product in order to enable
comparison between other
suppliers.

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 Respond Letter

◆ Send by supplier to purchaser.

◆ Used to answer the question from
enquiry letter.
◆ The response letter consists of the
followings:
◆ List of price goods ordering by
purchaser
◆ List of price all the goods that have
been sold by the supplier
◆ Catalogue
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 Purchase
Order

◆ This is issued by the

purchaser and sent to the
company which supplies the
goods.
◆ It specifies the quantity,
type and price of goods
required.

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DURING BUSINESS
TRANSACTION

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 DELIVERY NOTE

◆ Send by supplier to purchaser with the goods

and the buyer signs and returns this to the
supplier as proof of receives.
◆ The delivery note consists of the followings:
• To ensure the purchaser checked on the
goods whether is on good condition
without any defects.
• To ensure the purchaser signed on the
delivery note to ensure the goods have
been received.

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 INVOICES

◆ Send by the supplier to the purchaser.

◆ Showing the details of a credit sale.
◆ The invoice consists of the followings:
 Name and address of purchaser
 Invoice date
 Invoice no
 Customer’s order
 Quantity and price
 Item description
 Discount term
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AFTER BUSINESS
TRANSACTION

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 CHEQUE AND CHEQUE BUTT

 Cheque is an authorization to draw

funds from a bank account. In order to
do this, a cheque must state the name
of the payee, the amount to be paid,
and the date. A cheque is one of the
more common forms of payment used.
 Cheque butt is an evidence that
payment have been made by a cheque.
It also uses as a reference.

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 RECEIPT AND CASH VOUCHER

 Receipt is issued by supplier to the purchaser when

the payment was settle on the amount due on the goods
or services been supplied.
 Receipts consists of the following:
 Payment date
 Number of cheque if the payment made through
bank
 Total amount
 Name of company
 Cash Voucher is a standard form used to document a
petty cash payment. It also used to record the
transaction do not have a receipt or bills.
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 ACCOUNT STATEMENT

 Account statement is a record list of transaction

happened between suppliers and purchaser within a
period, normally 1 month.
 This statement is to ensure purchaser to check and
compare the details in the statement with invoices,
debit notes, credit notes and official receipts
received unit the period stated in the statement.
 The statement is a reminder that the outstanding
debts which must be settle by the purchaser when
period due.

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 MEMO

◆ Memo is a notice that consist information

about the business.
◆ Used when there is an increase in capital,
drawings or other extraordinary event.
◆ Example of notice:
o To add additional capital
o Withdrawals of goods, cash and fixed
asset by the owner.

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 DEBIT NOTE

 Debit note is the statement prepared by the supplier to

purchaser to inform that additional charge to be imposed
to the original invoice, which issued in the earlier.
 The debit note was issued when:
 Additional charge to the purchaser on the goods
delivered. Example: transport charges
 The unit price stated which is lower than the original
price sold
 Additional charges imposed when there is a change of
goods
 Interest to be charged on to the purchaser on late
repayment

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 CREDIT NOTE

 Credit note is prepared by the supplier to the purchaser to

reduce the debts (reduce the invoice amount).
 The credit note was issued when:
 There is a return of defect goods
 There is an additional unit price been charged in the
invoice.

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 SITUATION OF DEBIT AND CREDIT NOTE
ISSUING
Seller Buyer
Buyer Seller

Seller to Buyer
Buyer to Seller
• Credit Note – buyer
• Debit Note sent when informed of credit in
goods returned as they account (acknowledge
found unsatisfactory debit note)
• Credit Note sent when • Debit Note – buyer
seller undercharges or undercharged or sent
sent additional items. additional items.

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 LET’S
Are you smart enough?

RECAP!
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BUSINESS TRANSACTION
• Cheque & cheque butt
• Receipts & cash
voucher
• Enquiry letter During • Debit notes
• Credit notes
• Response letter • Account statements
• Delivery note
• Order form • Memo
• Invoice

Before
After
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No Transaction Source Document EXERCISE
1 Purchase goods on credits Invoices
2 Buy motor vehicles on credit Invoices
 
3 Owner tooks goods for personal use Memo 
4 Return goods from customer due to defect goods   Note
Credit
5 The owner brings in his personal cash to business Memo 
6 Remind the customer about balance of the debts at the and of every month  
Account Statement
7 Enquire about the products offered by the suppliers  
8 Evidence when payment has been made by cheque.
Enquiry  Letter
9 Purchased goods on credit from Musa Enterprise. Cheque
  butt
10 Sold goods on cash to Mimi Trading.  
Invoices
11 Receive invoice to inform that there is additional charge to the purchaser on the  
Receipt
goods delivered
12 Sending are list of order to supplier Debit Note
 
13  Owner withdrew cash for paying personal insurance.  
Order Form
14 Deliver goods to Mimi by Ninja Transporation  
15 Purchased furniture for office use and paid by cash.
Memo  
16 Receive quotation from new supplier of goods Zara. Delivery
  Note
Receipts

30 Response Letter
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EXERCISE

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 Thanks!
Any questions?
You can find me at @[email protected]

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