Uses Of Source Documents In Accounting

Hello friend, today we are going to learn all about source documents. I hope this article will be of help to you. What are source documents? Source documents are the documents which provide accounting information. Some of the examples of source documents are;

1. Invoice; an invoice is a document which gives the quarterly, quality unit price and amount of the items dispatched or received. It also gives the discount allowed and transport charges.

There are different kinds of invoices. These include;

I. Incoming invoices; these are invoices that are received from creditors. That is when goods are purchased on credit; they must be issued by the supplier.

II. Outgoing invoices; these are invoices that are sent to the debtor for example if the organisation has sold their goods on a credit basis.

What are the importances of invoices? You may ask.

I. Outgoing invoices help the customers check if the goods delivered to him/her are the ones indicated in the invoice.

II. It helps when writing a sales daybook.

III. In case of conflict between the debtor and the organisation, it can be used to resolve such since the carbon copy is sent to the debtor.

Incoming invoices on the other hand help in writing a purchase day book. It also helps to check if goods received are the ones in the invoice. What is a purchase day book? You may ask. This is where purchases made on credit during a particular day are recorded. On the other hand, a sales book is where credit sales made during a particular day are recorded.

2. The second type of source document is called a cash sale.

-It is a document issued by the seller to the buyer.

-It gives the description of goods bought, their prices and total amount paid.

- It also contains the name and address of the seller. These cash sales are also known as cash receipts.

There are two kinds of cash receipts;

I. Incoming cash receipts- These are received from the seller or creditor.

II. Outgoing cash receipts- These are used and given to the customers or purchases of goods.

That’s it for today. I hope the article was of help. Have a nice day!