Bookkeeping Documents
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