Bookkeeping Documents & Records
Source Documents
Bookkeeping source documents are the original records that provide evidence of a financial transaction. These documents serve as the foundation for recording and tracking financial transactions in the accounting system. They provide detailed information about the transaction, including the date, amount, parties involved, and the nature of the transaction.
A transaction refers to any financial activity or event that involves the exchange or transfer of goods, services, or money between two or more parties. It can be a purchase, sale, payment, receipt, or any other activity that affects the financial position of an individual, organization, or business entity.
Some common examples of bookkeeping source documents include:
- Sales Invoices: These documents are issued to customers when a sale is made. They include details such as the date of the sale, the customer's name and address, the description of the goods or services sold, the quantity, the price, and any applicable taxes or discounts.
- Sales Orders: These documents are prepared by a seller and issued to a customer, confirming the sale of goods or services involved in a transaction. This document includes essential details about the sale.
- Purchase Invoices: These documents are received from suppliers when a purchase is made. They contain information such as the date of the purchase, the supplier's name and address, the description of the goods or services purchased, the quantity, the price, and any applicable taxes or discounts.
- Purchase Orders: These documents are created by a buyer and sent to a seller, detailing the types, quantities, and agreed prices for products or services that the buyer intends to purchase. This document serves as an official request for goods or services and outlines important details such as payment terms, delivery instructions, and item specifications.
- Receipts: Receipts are issued to customers when they make a payment. They include details such as the date of the payment, the customer's name, the amount paid, the payment method, and any reference numbers.
- Bank Checks: A bank check, commonly referred to simply as a check, is a written, dated, and signed instrument that directs a financial institution (the drawee) to pay a specific sum of money to the bearer or designated payee.
- Online Bank Payments: Electronic transfers of funds from one bank account to another via the internet. This process typically involves using a bank’s online banking platform or mobile application, allowing customers to conduct various financial transactions without needing to visit a physical branch.
- Bank Statements: Bank statements provide a record of all transactions that occur in a bank account. They include details such as the date, the description of the transaction, the amount, and the balance of the account.
- Payroll Records: Payroll records include documents such as timesheets, pay stubs, and payroll registers. They provide information about employee wages, deductions, and taxes withheld.
- Cash Register Tapes: Cash register tapes are used to record sales made at a point of sale. They include details such as the date, the items sold, the quantity, the price, and the total amount.
- Contracts and Agreements: Contracts and agreements are legal documents that outline the terms and conditions of a transaction or business arrangement. They provide evidence of the rights and obligations of the parties involved.
Each type of source document contains critical information such as dates, amounts, parties involved, and descriptions of the transactions
Source documents play several key roles in bookkeeping and accounting:
- Evidence of Transactions: They provide tangible proof that a financial event occurred, which is vital for both internal record-keeping and external audits.
- Audit Trail: Source documents create an audit trail that auditors can follow to verify the accuracy and legitimacy of financial statements.
- Facilitating Reconciliation: They assist in reconciling accounts by providing detailed information about each transaction, ensuring that recorded amounts match actual cash flows.
It is important to keep these documents organized and retained for a certain period of time for reference, auditing, and compliance purposes. While traditionally kept in physical form, many organizations now utilize digital formats due to advancements in technology. Digital copies must be complete, legible, and accurate representations of the originals to be considered valid under regulations set forth by tax authorities like the IRS in the United States or the CRA in Canada.
These are just a few examples of bookkeeping source documents. The specific documents used may vary depending on the nature of the business and the industry.
Source Documents Video
Bookkeeping Records
Chart of Accounts: The Chart Of Accounts is a listing of all the individual accounts in the general ledger that contains the account's name, a brief description of the account, and optional other identifiers (codes) or a coded account number assigned to aid in recording, classifying, summarizing, and reporting transactions. Your accounting system is built around this skeleton list of account names called the chart of accounts and is organized by the types of major accounts. The accounts you set up are tailored for your particular type of business.
General Ledger: The General Ledger is the central record-keeping system that contains all the financial transactions of a business. It includes accounts for assets, liabilities, equity, revenue, and expenses. Entries from the Journals are summarized and posted to the General Ledger.
Accounts Receivable Ledger: This ledger tracks the amounts owed to the business by its customers for goods or services provided on credit. It includes individual customer
accounts and records transactions such as sales, payments, and adjustments.
Accounts Payable Ledger: This ledger tracks the amounts owed by the business to its suppliers for goods or services received on credit. It includes individual supplier
accounts and records transactions such as purchases, payments, and adjustments.
Inventory Records: Inventory records track the quantity and value of the goods held by the business for sale. It includes information such as the description of the items, quantity on hand, cost, and selling price.
Payroll Records: Payroll records track employee wages, deductions, and taxes withheld. They include information such as timesheets, pay stubs, payroll registers, and payroll tax reports.
Types of Journals:
- The Cash Receipts Journal is a special journal that is used to record all receipts of cash.
- The Sales Journal is a special journal where sales of services and merchandise made on account (business's customer is allowed to charge purchases) are recorded.
- The Cash Disbursements Journal is a special journal that is used to record all cash that is paid out by a business except for payroll.
- The Purchases Journal is a special journal that is used to record all purchases and various expenses and other charges from suppliers that a business has an open account with (supplier allows the business to charge purchases).
- The Sales Return & Allowances Journal is a special journal that is used to record the returns and allowances of merchandise sold on account.
- The Purchase Returns & Allowances Journal is a special journal that is used to record the returns and allowances of merchandise purchased on account.
- The Payroll Journal is a special journal that is used to record and summarize salaries and wages paid to employees and the deductions for taxes and other authorized employee withholding amounts (not discussed in this tutorial).
- The General Journal is the record used to record unusual or infrequent types of transactions. Type of entries normally made in the general journal are depreciation entries, correcting entries, and adjusting and closing entries.
These are just a few examples of common bookkeeping records. The specific records used may vary depending on the nature and size of the business. It is important to maintain accurate
and organized records to ensure proper financial management and compliance with legal and regulatory requirements.
Bookkeeping Records Video
