Source Documents Flashcards
What is a source document?
It is a written document that provides details of a transaction and the evidence that the transaction has taken place.
Which accounting principles do the use of source documents adhere to?
- Objectivity principle
2. Historical cost accounting theory
What is the purpose of a source document?
To capture information about a business transaction. It is like taking a photograph of the event
Where are the details in a source document recorded?
In a journal, which is like a diary. It is a daily record of transactions organised by transaction dates
What is a receipt’s purpose?
A receipt acknowledges payment received from customers immediately after the business has sold goods or provided services.
What is a remittance advice purpose?
It informs credit suppliers that payment by cheque has been made for a specific invoice.
What is an invoice purpose?
It informs credit customers of the amount owed after the business has sold goods or provided services on credit
What is a credit note’s purpose?
A credit note reduces the amount owed by credit customers:
- who were previously overcharged or
- After goods were returned
What is a debit note’s purpose?
Debit notes increases the amount owed by credit customers who were previously undercharged.
