source documents. the accounting department of a business does not start the transactions that a...
TRANSCRIPT
Source Documents
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 CrBank 35.90 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
CrA/R - S. & S. Boatworks 835.70 Sales 835.70
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 CrBank 743.18 Sales 743.18
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 CrEquipment Repairs 241.50 A/P – General Engineering 241.50
• Advertising Expense 240.00 A/P – Coleman Boats 240.00
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)
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 CrA/P – Sterling Spars 1802.90 Bank 1802.90
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 CrBank 2,142.24 A/R – A. Baldwin
375.00 A/R – F. Perri
965.52 A/R – Pier 10 Marina 801.72
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 CrInterest Expense 113.50 Bank 113.50
Source Documents
Source Document
Transaction Description
Accounts Debited
Accounts Credited
Cash Sales Slip, POS summaries
Sale of goods/services for cash
Bank Sales or revenue
Sales invoice Sale of goods/services on account
A/R Sales or revenue
Purchase invoice Purchase of goods/services on account
Expense account or Asset account
A/P
Cheque copy 1.Paying an A/P2.Cash purchase of asset*3.Cash payment of expense*4. Owner drawing
1. Liability account2. Asset account (autos)3. Expense account4. Drawings
Bank
Cash receipts daily summary
Cheques received from customers on account
Bank A/R
Bank debit advice Bank account decrease
Interest expense or other account
Bank
Bank credit advice Bank account increase
Bank Interest earned or other account
* Must have a bill or receipt with it.
Additional Documents
• Receipts
• Bills (like phones, electricity, etc)
• Email invoices
• Online banking transactions with confirmation numbers.
• Insurance endorsement certificates
• Written memos from the owner
• Bank statements
• Cash register tapes (old)
Homework
• Page 193-196 Exercises #1-5.