Top 11 Source Documents In Accounting: Overview, Importance, Types & Usages

Source documents in accounting are essential internal documents of a company that act as evidence of a business deal. Most of the time, they function as a bookkeeping process from the reference point. 

A paper trail is created each time when the business engages in financial transactions. In most of the cases, all the term source documents are referred to as paper trail. Most of the corresponding records comprise sources of information. 

Some of the common records include the following:- 

• Cheques are written to be cashed. 
• Transactions on bills delivered by suppliers. 
• Receipts are produced after sales are made. 
• Employees filled out time sheets. 

Now, to know the details of the essential source documents in accounting you need to follow certain points. These are essential for your proper financial record keeping.

Types of Source Documents In Accounting?

There are lists of source documents in accounting that form an essential part of bookkeeping. It helps to keep track of all financial records. Some of the key documents that you must take care of while adding the source documents in accounting are as follows:- 

1. Purchase Orders

The first and the most important source documents in accounting is the purchase order document. First, you need to fill out the purchase order form to purchase something. In most of the cases, the order form can be as straightforward as a page cut. 

A duplicate book can be one that the online seller provides through its online storage of the catalog. As the buyer could not be aware of the expenses at the time of placing the purchase order. In most cases, forms may not include the purchase cost. 

2. Quotes

The customers may sometimes make requests for quotes for the goods if they wish to purchase from the sellers. A selection over which the customers can purchase the products made after considering weighing the estimates. 

Typically, the selection of quotes is based on the fact of who quotes for the least expensive quotes to the seller. In most cases, the supplier will then convert all the quotes to sales invoices after the placement of the orders. This is one of the crucial source documents in accounting. 

3. Purchase And Sales Invoices

The seller will develop a paper highlighting all the specifics of the sales when any item is for sales. Now, if the seller does not require any payment in full before the goods are delivered. You need to specify the payment terms. How long the buyer has to make payments on their invoice will be mentioned in the payment terms. 

It is one of the crucial source documents in accounting that can help your business to grow in the correct order. If you want to track all the accounting records in proper order then you cannot ignore the importance of purchase and sales invoices. 

4. Delivery Dockets

All the delivery dockets will be frequently provided by the seller as the goods are shipped, delivered, or posted. In most cases, the description includes all the delivered goods so that all the customers can compare it as the order soon it arrives. 

This is one of the essential source documents in accounting. These can boost the scope of offering quality documents within a particular time. All the orders can arrive all at a time. These documents can offer the evidence at the time of any breach of contracts. 

5. Payments/ Remittance Advice

Whenever the customers pay off their bills they deliver the remittance advice to the supplier. As it includes the payment amount as well as the invoice numbers. However, if the payment is made using internet banking then it will be posted along with the cheque separately. 

At the time of sales and purchase of invoices, all the remittances are preprinted. As a tiny cut-out piece at the bottom or along the right side. Therefore, you need to get through these facts when you want to make the payment of the remittances. 

6. Debit And Credit Note

All the sellers will include a unique remark in order to indicate the amount repaid. Now, if the buyer decides not to keep an item but to return it to the vendor then this application is known as a credit note in the seller’s bookkeeping system. 

As it lowers the amount customers owe to the seller it is known as a debit note in the customer’s bookkeeping system. This is why it is one of the essential source documents in accounting. As it can boost the scope of your record-keeping system easily.

7. Receipts

In most cases, a vendor may provide the receipts following the consumer payments of invoice. Whenever you pay with cash it’s a good practice to have a receipt as the confirmation of payment. 

Whenever you purchase goods from the store or any online retailer then receipts will be issued automatically. This is one of the fundamental aspects of receipts that you must be well aware of. 

8. Cheques

Whenever the customer pays cheque or cash then the seller creates a blank deposit slip. This is presented to the bank along with checks and cash. The person who is an authorized signatory of the bank account from which the cheque is issued must sign the check. 

Each check comprises a unique number that you need to enter in the accounting software. This can boost the scope of your check balances in perfect order. Without knowing the facts you cannot make your choices in grey. 

9. Deposit Slip

Whenever the consumer pays off the check or cash at that point in time seller creates a bank deposit slip. This is presented to the bank along with a check as well as cash. As soon as the total amount is deposited the breakdown of the cash and check amount will be shown in the deposit slip. 

All your transactions will be recorded by the bank as it appear both on the payors’ and recipients’ bank statements. Thus the bank statement shows all the payments received and made respectively. 

10. Consignment Note

A consignment note is a document that accompanies goods being transported and comprises details of shipment. This is one of the crucial aspects of the consignment note that you should be well aware of. 

A consignment note will offer you evidence about the full shipment of the goods from one place to another. So, you can track things easily without worrying about any legal consequences. 

11. Goods Receipt Note

A goods receipt note is an official document that helps to verify that the supplier has delivered the goods to the buyer and that the buyer has received them. So, it is proof that the goods are safely delivered to the receiver. 

If in the future receivers of the goods raise any complaint regarding the delivery of the goods then this goods receipt not will act as evidence. You need to be well aware of these essential source documents in accounting if you are a seller. 

When Each Of These Documents Are Used? 

The source documents in Accounting are used for various purposes. Now, it all depends on the document you want to make use of in your accounting methods. 

1. Purchase Order

A purchase order is issued from a buyer to the supplier which indicates the buyer’s intention to purchase the goods and services. In this process, the buyer formally requests to buy goods and services from the supplier.  All the transactions need to be documented before the delivery of the goods and services. In most cases, the buyer wants to specify the terms of the purchase which should include quantity, delivery date, and price. 

2. Sales Order

The main use of the sales order document is to receive the purchase order or confirm the order of the customers. In most of the cases, it outlines the details of the sales. So, you will receive the complete details of the sales from the sales order. This is why it is one of the essential source documents in accounting. 

3. Quotes

Quotation documents are a potential sale where prices are provided and negotiated. Additionally, this can boost the scope of your business quotes in perfect order. It will assist you in getting the right quotes for your sales or purchase order. 

4. Purchase & Sales Invoices

Whenever a business buys goods and services on credit from a customer then they raise the purchase or sales invoice. It acts as proof of the purchase and records the amounts owed. Additionally, this can boost the scope of your business development. 

5. Delivery Dockets

When the goods are delivered to the customers or received from the supplier then the delivery docket document is used. However, it is also one of the crucial source documents in accounting that you cannot ignore from your end. 

6. Payments As Well As Remittances Advice

Payments as well as remittance advice is a note or document that is sent by the payer to the payee often accompanying the payment that is sent separately. This is used to inform them of the payment details separately.   

7. Debit & Credit Note

When the customer returns the goods to the seller and the seller accepts the overcharge then a debit note is used. On the other hand, when sellers adjust an invoice for the accounts and overbilling. 

8. Receipts

Payment in most cases is received from a customer that is made from the supplier. Additionally, you need to follow the correct process to reach your requirements with absolute clarity. Ensure that you know the best process from your counterpart.

9. Cheques

Cheques are used when payments are made through a bank transfer. Additionally, these can boost the scope of your brand value to a greater level. Try to figure out the best solution that can assist you in meeting your needs.
 

10. Deposit Slip

A deposit slip is a document that is provided by the bank that allows all customers to specify the details of the deposit made in their account. In most of the cases, it records both the transaction for the depositor as well as the bank.

11. Consignment Note

A Consignment Note is a document used in logistics and transportation to detail the shipment of goods from a consignor (sender) to a consignee (receiver). This is an essential source document in accounting.

12. Goods Receipt Note

The goods receipt note confirms that all the delivered goods match the purchase order in terms of description, quantity, and quality. Additionally, this can boost the scope of your source documents in accounting.

Final Take Away 

Hence, these are some of the crucial source documents in accounting that can help you in boosting your brand image. All these source documents of accounting will help you to meet your goals with ease. 

You can share your views and comments in our comment box this will help us to know your take on this matter. Here, proper planning holds the key. You must try to figure out the best solution that can make things work well in your favour.

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ICA Edu Skills Team

Working with businesses in diverse industries. I'm passionate about helping others understand and manage their finances effectively. This blog is where I share practical tips, insightful guides, and the latest updates on accounting, taxation, GST, TallyPrime, and advanced Excel. Feel free to ask questions, leave comments.

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