Source documents

A source document is a business paper from which information is obtained for a journal entry. It can
also be a written document that provides details of a transaction and the evidence that the transaction
has taken place. In other words, these are documents used as sources of information for the
preparation of subsidiary books.

Note: A journal entry is a day-to-day record of a business transaction.

Features of a good source document:

 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.

Types of Source Documents

There are many types of source documents and the most common are:

1. Receipts Book: These are documents from which the information for cash and cheques
received from customers are obtained. This piece of information is transferred to the
cash book, bank column if a cheque is received and cash column if cash is received.
2. Petty Cash Voucher: it is used as evident of payment (very small sum) to a named party
this is where the information for recording in the petty cash book can be obtained. Thus
it covers payments credited to the petty cash book. In other words it is a document used
to record petty cash expenses.
3. Invoice: this sets out the full details of goods sent by the suppliers to the buyer stating
the quantity, price, discount given and terms of payment.
a. Sales invoice: credit sales information is obtained from the sales invoice. The sale
invoice gives the details of goods sold on credit such as the price, quantities, trade
discount, etc. this is a source document for sales journal. Thus the information
obtained from the sales invoice is transferred to the sales journal.
b. Purchase Invoice: this gives detailed information about goods bought on credit such
as the price, quantities, etc. and any trade discount, if any. The information on this
document is use for the purchase daybook.
4. Pay-in-slip: This is the document that gives information for entries on the debit side of
the bank column of the cash book. This document is given out to anybody who operates
 a current account with a bank to be used when cash is paid/ deposited into the bank.
Thus is a record for all deposits made by the current account holder.
5. Cheque counterfoil: this is a small portion of the cheque book, where similar information
on a detached cheque can be found. It usually informs about the cheque number,
payee’s name and the amount paid.
6. Credit note: a document acknowledging purchases returns and sales returns. It is also used in
cases where the goods have been overcharged. In other words it is a document sent by the seller
to the customers for reduction in the amount owed to him. In each case it is the seller who
makes out the invoice and credit note.
7. Debit Note: a document sent by a seller to the buyer to correct an undercharge or when goods
are not charged on the invoice. It informs the buyer about the extra amount which has to be
paid to the seller. The buyer can also use it to claim an overcharge or for items (on credit) return
to the seller.
8. Bank Statement: is a report sent by the bank to its current account holder. It contains
information related with money deposited into the bank and money withdrawn out of the
account during a particular period.