1. Chapter 6- Source Documents

2. Source Document (p.184)
Is a business paper that shows the nature of a transaction.

3. Who & Why? Government  Tax  Audited Bank  Credit available  Loan
Customer  proof of transaction
Owner  records/ reference

4. Information found on source documents for transactions include:
Nature of the transaction
Types of product or service
Names of customers or creditors
Transaction date
Amount of money involved

5. Cost Principle (p. 35)
State that accounting for purchases must be at cost price (price you paid for it)
Value does not change even if market value changes, only if you sell the item

6. Objectivity Principle (p. 58)
Accounting will be recorded on the basis of objective evidence (proof), thus accounting entries will be based on fact and not on personal opinion
Source documents provide the proof for transactions and are kept on file for reference purposes

7. Bills Utilities Telephone Insurance Many more Cheque Monthly Payments
Online
Direct withdrawal

8. Purchase Invoice:
When the business purchases something on account. The seller will send you a purchase invoice
‘Purchase on account’
Journal entry:
Asset or Expense DR
A/P CR

9. Sales Invoice
When the vendor sells something on account; send the debtor a sales invoice for goods purchased or services provided
‘Sale on account’
Journal entry
A/R DR
Revenue CR

10. Cash Sales Slip: Manual total of a cash sale Point of Sale Summary
A computerized sales register that allows a business and its customers to exchange funds electronically (debit)
Credit Cards  Pay within 30 days or charged with interest

11. Cash Receipts Daily Summary
Cash receipts list of money coming in from customers (deposit)  Sales cash
 Payment by A/R

12. Cheques: Received from debtors (A/R) ‘Received on account’
Journal Entry:
Bank DR
A/R CR

13. Cheque Copies (company issues)
Copy of cheque your business has written for:
Assets purchased
Expenses paid
Liabilities paid
Owner drawings

14. Bank Advice Bank Debit Memo: Bank Credit Memo:
When bank decrease the business’s cash account (ie. Service changes)
Bank’s bank account increases
Business’s bank account decreases
Bank Credit Memo:
When bank increases the business’s cash account (ie. Interest earned)
Bank’s bank account decreases
Business’s bank account increases
The Bank’s Point of View

15. Exercises:
Read Chapter 6.3 p (t) & answer review questions # 3,4,7-10,12-21 p. 193 (t) p (w)