Section 2 of 12
A source document is a written record that provides evidence that a business transaction has taken place. It is the starting point of the accounting system.
| Document | Who issues it | When | Triggers |
|---|---|---|---|
| Sales invoice | Seller | When goods/services are sold on credit | Entry in sales day book |
| Purchase invoice | Seller (received by buyer) | When goods/services are bought on credit | Entry in purchases day book |
| Sales credit note | Seller | When a credit customer returns goods or a price reduction is agreed | Entry in sales returns day book |
| Purchase credit note | Supplier (received by buyer) | When goods are returned to a supplier | Entry in purchases returns day book |
| Document | Used for |
|---|---|
| Cash receipt | Issued to a customer paying cash; proves cash has changed hands |
| Till roll | Retail businesses use this to record all cash sales during a day |
| Cheque counterfoil | The stub retained by the payer; records date, payee and amount of a cheque written |
| Paying-in slip counterfoil | Retained when cash or cheques are paid into the bank; records date and amount |
The bank statement is itself a source document. Key items to recognise:
| Item | Abbreviation | Nature |
|---|---|---|
| Standing order | SO | Fixed regular payment set up by the business |
| Direct debit | DD | Variable regular payment authorised by the business; amount set by payee |
| BACS credit transfer | BACS | Electronic payment received — e.g. wages paid in, or customer settlements |
| Dishonoured cheque | — | A cheque that has been returned unpaid (e.g. customer's account had insufficient funds) — reverses the original receipt entry |
| Debit card payment | — | Immediate payment direct from the bank account |
Distinction: Standing order = fixed amount (e.g. rent). Direct debit = variable amount (e.g. phone bill).
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