Source documents and what each proves
≈ 30 minNo entry without evidence
An accounting record is only worth something if it can be checked. A source document is the paper or electronic record created when a transaction happens, and it fixes four facts: the date, the amount, the parties, and what was exchanged.
Every figure in a journal should be traceable back to a numbered document, and from the ledger back to the journal. That chain is how an owner detects theft, how an auditor tests a figure, and how a dispute with a supplier gets settled.
The four documents to know first
Receipt. The business issues a receipt when it receives money directly from someone. The payer keeps the original and the business keeps the duplicate, which is what the business records from. A receipt proves money was received, from whom, and for what.
Invoice. The seller issues an invoice when goods or services are supplied on credit. It proves what was supplied, at what price, and that an amount is now owed. An invoice is a demand for payment, not proof of payment.
Cheque counterfoil. When a cheque is written, the stub that stays in the chequebook is the counterfoil. It proves the business paid a stated amount to a named payee on a stated date. An electronic payment confirmation serves the same purpose in a business that pays by EFT.
Deposit slip. Completed when cash takings are handed in at the bank. The duplicate, stamped by the bank, proves the money left the business premises and reached the business bank account.
| Document | Prepared by | Proves |
|---|---|---|
| Duplicate receipt | The business | Money was received |
| Invoice issued | The business | Goods or services supplied on credit, and an amount is owed to the business |
| Invoice received | The supplier | Goods or services bought on credit, and an amount is owed by the business |
| Cheque counterfoil or EFT confirmation | The business | Money was paid out |
| Duplicate deposit slip | The business, stamped by the bank | Money was banked |
Naming the document
Worked example. For each event at Kasi Kuts, name the document the entry would be based on.
| Event | Source document |
|---|---|
| A customer pays R250 in cash for a haircut | Duplicate receipt from the receipt book |
| R4 525 of takings is handed in at the bank | Duplicate deposit slip, stamped by the bank |
| Rent of R4 200 is paid by cheque | Cheque counterfoil |
| Clippers of R2 800 are bought on credit from Vaal Hair Supplies | Original invoice received from the supplier |
| A college is billed R6 000 for a grooming workshop, payable in 30 days | Duplicate of the invoice issued by the business |
Notice the pattern for money in and money out. Money received produces a receipt and later a deposit slip. Money paid produces a counterfoil or payment confirmation. Credit transactions produce invoices, and the copy the business keeps depends on whether it was the seller or the buyer.
Core checkpoint: for any transaction, ask two questions. Did money move, or only an obligation? And was the business the giver or the receiver? Those two answers point to exactly one document.
Which document proves that cash takings were handed in at the bank and reached the business bank account?
What does a cheque counterfoil prove about a transaction?