Source Documents

The Accounting department of a business does not start the transactions that a business. Sales, the owner, supervisors, managers, all produce transactions. These people have to inform the accounting department that transactions have taken place.

Source Documents The information that Accounting employees use for their journals come from source documents. They explain the type of transaction and gives all the information needed to claim it. They must be kept on file. (Why do you think this is?)

Source Document (CASH SALES SLIP) These are business documents that give details of a transaction where goods or services are sold for cash. There is usually at least one copy.

Source Document (Cash Sales Slip) Journal entry for a Cash Sales Slip Dr Cr Bank Sales 35.90

Source Document (Sales Invoice) A lot of businesses do not deal with the public. This means they do not have cash sales. What are their sales then?

Source Documents (Sales Invoice)

Source Document (Sales Invoice) The person or business selling is called the vendor. The one that is buying is called the purchaser. Journal entry for a Sales Invoice Dr Cr A/R - S. & S. Boatworks Sales

Source Document (Point of Sale Summaries) More transactions than ever use plastic payment (Debit or credit cards). A Point of Sale (POS) Terminal is a cash register that lets a business and its customers exchange cash electronically. At the end of a business day, the account department prints two documents from the POS terminal. One is called the Host Reconcilliation/Card Summary. This gives sales information on that day.

Source Documents (Point of Sale Summaries) Called reconciliation because the business will compare the number at the bottom of this sheet with the bank statement at the end of the month. The second document is called a transaction log that gives information about each transaction. Customers name, card number. This is used for disputes. Journal entry for POS Summaries Dr Cr Bank Sales

Source Document (Purchase Invoice) A purchase invoice is created when a business buys something from another business ON ACCOUNT.

Source Document (Purchase Invoice) Journal entry for a Purchase Invoice Dr Cr Equipment Repairs A/P – General Engineering Advertising Expense A/P – Coleman Boats

Source Documents (Cheque Copies) A lot of business is still paid for with cheques. They are usually sent in the mail. They are usually used to pay for things purchased on account but can be used for bill paying, wages, drawings, etc.

Source Documents (Cheque Copies)

Sometimes, cheques are used to make cash payments. If this happens, you need a bill or receipt to prove you used a cheque. If the owner writes a cheque for himself, a copy of the cheque is good enough. Journal entry for cheque copies Dr Cr A/P – Sterling Spars Bank

Source Documents (Cash Receipts Daily Summaries) Business receive cheques as well. Called “cash receipts.” Cheques have to be deposited to the bank. A list must be prepared by whoever receives the cheques, of all the money coming in. It shows: -Who sent the money, -How much was sent (remittances) -What is was paying for.

Source Documents (Cash Receipts Daily Summaries) Journal entry for Cash Receipts Daily Summaries Dr Cr Bank 2, A/R – A. Baldwin A/R – F. Perri A/R – Pier 10 Marina

Source Documents (Bank Advices) Sometimes the bank makes changes to the bank account of a business. They let the business know with a bank advice. -Bank debit advices lets the business know about a decrease to the account. -Bank credit advices let the business know about an increase to the account.

Source Documents (Bank Advices) Journal entry for a bank advice Dr Cr Interest Expense Bank

Source Documents Source DocumentTransaction Description Accounts DebitedAccounts Credited Cash Sales Slip, POS summaries Sale of goods/services for cash BankSales or revenue Sales invoiceSale of goods/services on account A/RSales or revenue Purchase invoicePurchase of goods/services on account Expense account or Asset account A/P Cheque copy1.Paying an A/P 2.Cash purchase of asset* 3.Cash payment of expense* 4. Owner drawing 1. Liability account 2. Asset account (autos) 3. Expense account 4. Drawings Bank Cash receipts daily summary Cheques received from customers on account BankA/R Bank debit adviceBank account decreaseInterest expense or other account Bank Bank credit adviceBank account increaseBankInterest earned or other account * Must have a bill or receipt with it.

Additional Documents Receipts Bills (like phones, electricity, etc) invoices Online banking transactions with confirmation numbers. Insurance endorsement certificates Written memos from the owner Bank statements Cash register tapes (old)

Homework Page Exercises #1-5.