2.13. Source documents
The major source documents used in accounting are as follows;
Invoice: Confirms details of goods ordered or
purchased by a customer. Invoices are generally used to provide a document for
a credit transaction. It is usually to include details of the credit terms that
is the credit period offered and discount offered.
There are two types of discounts:
Trade discount: Given to firms that are
trading in the same merchandise and are likely to return for future orders.
This discount is calculated when the invoice is prepared and may be deducted
from the sales total shown on the invoice.
Cash discount: This is given to customers for
prompt payment. It is an inducement for customers to pay the amount owing
within the credit term. The discount is calculated only when the customer pays
and is not shown in the invoice but in the official receipt.
11 Anthony, R.N. and J.S , Management accounting
principles, Taraporewala,1975,p.11
Official receipt: These are documents which
evidence cash transactions. They are issued or received when cash is paid or
received.
Credit notes: These are used to describe any
items sold on credit. Which are being returned to the firm by its customers.
Goods returned may be defective, damage or of inferior quality than what was
ordered and invoiced.
Debit notes: These are the opposite of credit
notes and are used to describe details of goods bought on credit, which are
returned by the firm to the suppliers. The amount corresponding to the goods
returned will be deducted from the amount owing.
2.14. Other source document
Authority to incur expenses: This is
statutory authority vested in a person known as an accounting officer to make
payments out of public funds for services for which parliament has decided upon
by statute. Once this power is exercised the authority to incur expenditure
provides financial information as to the occurrence of the transaction.
Minutes: It is a record of the business
transacted at a meeting. Minutes are source documents for authority to transact
major non trading financial activities in the business such as the purchase of
new assets not for resale but for use in the business.
Resolution: This is the acceptance of the
proposal, for example to incur expenditure, put forward for discussions and
decision at a meeting , after it has been put to vote and agreed to by the
necessary majority at the meeting. It is a source of transactions data relating
to expenditure of material nature outside the normal activities of the firm.
Cheque: This is a written order from a bank
current account holder addressed to his bank to pay a stated sum of money to or
to the order of the person named on the order or to its bearer. A cheque has a
detachable tally or counterfoil containing a summarized record of the contents
of the cheque and it shows transactions data on payments made by cheque.
Voucher: This is a document in which every
obligation that the business organization incurs is recorded. It serves as a
written authorization to pay cash or to issue cheques and is usually signed by
the appropriate authorized officer of the firm.
Bank statement: This is a document issued
periodically for example monthly or quarterly by the bank to its customer
informing him of the state of his financial affairs at the bank. As the
customer maintains a record of his bank account in his own books the bank
statement is issued to sort out any difference between the two in a process
called bank reconciliation.
Current account deposit slip: This is a sheet
used to record the deposit of money into an account in the bank. It is written
evidence that money has been deposited into the bank account.12
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