What are 7 source documents?

7 Essential Source Documents in Accounting

In the realm of accounting, accuracy and transparency are paramount. Source documents serve as the backbone of this process, providing irrefutable evidence of transactions and ensuring the integrity of financial records. Let’s delve into the seven most common types of source documents that play a crucial role in accounting:

1. Purchase Orders

Purchase orders (POs) initiate the procurement of goods or services. They outline the specific items ordered, quantities, prices, and delivery instructions. POs establish a commitment between the buyer and supplier, providing authorization for the purchase.

2. Sales Invoices

Sales invoices are issued by sellers to document the sale of goods or services. They contain essential information such as the customer’s details, products sold, quantities, prices, and payment terms. Sales invoices serve as a record of revenue generated.

3. Delivery Dockets

Delivery dockets are used to verify the delivery of goods ordered. They acknowledge that the items have been received and accepted by the customer. Delivery dockets contain details about the goods delivered, quantities, delivery address, and recipient’s signature.

4. Receipts

Receipts confirm the receipt of payments made for goods or services. They typically include the date of payment, payer’s information, amount received, and a brief description of the transaction. Receipts are essential for tracking cash flows and ensuring accurate accounting records.

5. Credit Notes

Credit notes are issued by sellers to adjust billing errors or provide refunds. They reduce the amount owed by the customer and may be issued for reasons such as incorrect invoicing, returned goods, or price adjustments. Credit notes maintain the accuracy of accounts receivable and prevent overbilling.

6. Bank Statements

Bank statements provide a detailed record of financial transactions processed through a bank account. They show deposits, withdrawals, charges, and account balances. Bank statements are essential for reconciling bank accounts and ensuring the completeness and accuracy of financial records.

7. Payroll Records

Payroll records document employee compensation and deductions. They include information such as employee details, hours worked, earnings, and deductions for taxes, insurance, and other benefits. Payroll records are crucial for calculating employee salaries, withholding taxes, and compliance with labor laws.

These seven source documents form the foundation of accounting practices. They provide an auditable trail of transactions, ensure the accuracy of financial records, and facilitate transparency in financial reporting. By adhering to rigorous source documentation practices, organizations can maintain the integrity of their accounting systems and build trust with stakeholders.