Chapter 6Source
Documents
Source Document (p.184)
Is
a business paper that shows
the nature of a transaction.
Who & Why?
 Government
 Bank
 Tax  Audited
 Credit available  Loan
 Customer
 Owner
 proof of transaction
 records/ reference
Information found on source
documents for transactions
include:
 Nature
 Types
of the transaction
of product or service
 Names
of customers or creditors
 Transaction
 Amount
date
of money involved
Cost Principle
(p. 35)
State
that accounting for
purchases must be at cost
price (price you paid for it)
Value
does not change even if
market value changes, only if
you sell the item
Objectivity Principle
(p. 58)
Accounting
will be recorded on the
basis of objective evidence (proof),
thus accounting entries will be based
on fact and not on personal opinion
Source
documents provide the proof
for transactions and are kept on file for
reference purposes
Bills
 Utilities
 Telephone
 Insurance
 Many
more
Cheque
Monthly
Payments
Online
Direct
withdrawal
Purchase Invoice:
 When
the business purchases something
on account. The seller will send you a
purchase invoice
 ‘Purchase on account’
 Journal
entry:
Asset or Expense
A/P
DR
CR
Sales Invoice
 When
the vendor sells something on
account; send the debtor a sales invoice
for goods purchased or services provided
 ‘Sale on account’
 Journal
entry
A/R
Revenue
DR
CR
Cash Sales Slip:
Manual
total of a cash sale
Point of Sale Summary
A
computerized sales register that
allows a business and its customers to
exchange funds electronically (debit)
Credit Cards  Pay within 30 days or
charged with interest
Cash Receipts Daily Summary
Cash
receipts list of money
coming in from customers
(deposit)  Sales cash
 Payment by A/R
Cheques:
Received
from debtors (A/R)
‘Received on account’
Journal
Entry:
Bank
A/R
DR
CR
Cheque Copies (company
issues)
Copy
of cheque your business
has written for:
Assets
purchased
Expenses paid
Liabilities paid
Owner drawings
Bank Advice
 Bank

The
Bank’s
Point
of
View


When bank decrease the business’s cash
account (ie. Service changes)
Bank’s bank account increases
Business’s bank account decreases
 Bank



Debit Memo:
Credit Memo:
When bank increases the business’s cash
account (ie. Interest earned)
Bank’s bank account decreases
Business’s bank account increases