Understanding Bookkeeping

• Source document - a written document that provides details of a transaction and the evidence that the transaction has taken place. All accounting entries are based on information derived from these source documents.

• Source documents are important to businesses - to provide evidence or proof that a transaction has occured;used as part of a process to record information into the books of original entry and are required for audit purposes.

• Good features of source documents - date when transaction took place;names and addresses of the parties concerned namely the buyer and seller;nature of the transaction ie description of the goods or services; terms and conditions of the transaction ie trade discount, cash discount, delivery details and an authorised signature.

• Uses of source document:

• Invoice: to inform buyer of the amount to pay for goods&services supplied by the seller

• Credit note: to correct an overcharge in the invoice
• Debit note: to correct an undercharge in the invoice
• Payment voucher: as evidence of payment to a named party
• Cheque counterfoil: as record of amount paid on a particular numbered cheque to the payee
• Receipt: To acknowledge money received
• Bank Statement: Summary of monthly transactions of current account holders with the bank.

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