Source Document for Journal Entry

Q: Q1. What will the sale bill be called for the opposition?

Ans: For the opposition, the sale bill will be called the purchase bill.

Q: Q2. What is a purchase bill?

Ans: A purchase bill is a document received at the time of purchase.

Q: Q3. What is a sale bill?

Ans: A sales bill is a document used when selling a product.

Q: Q5. Write some examples of source document for journal entry.

Ans: Following are some examples of source document for a journal entry: - Sale Bill - Purchase Bill - Cash Receipt - Debit Note - Credit Note - Cheque - Deposit Slip - Bank Statement

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Whatever work is done in accounting is based on the source document because no work can be done in accounting at will, that is why it is necessary to have the relevant source document before passing journal entries. For example, to pass the entry of a purchase transaction, it is necessary to have a purchase bill/invoice/slip, similarly, to pass the entry of sale, it is necessary to have a sales bill/invoice/slip.

In accounting, every document is the source of a journal entry, but the condition is that the document carries out an economic activity. Every supporting document for journal entries is considered a legal document and is supported by law as documentary evidence. Sales bill, purchase bill, cash receipt, cheque, payment slip, debit and credit note, bank statement, etc. are some examples of source documents for journal entry.

Source Document for Journal Entry

Following are the source document for journal entry:

1. Sale Bill:

A sales bill or invoice is a document used when selling a product. It is proof that goods have been sold to someone and can be based on cash or credit. A cash bill is issued if the product is sold for cash and a credit bill is issued if the product is sold on credit. Note: For the person who receives this bill, it becomes a purchase bill.

Contents of Sales Bill/Invoice:

Document Number
Date of Document
Seller Details
Buyer Details
Item Description
Quantity
Price
Total, and
Other important details etc.

2. Purchase Bill:

A purchase bill or invoice is a document that is received at the time of purchase of a product and is a proof of product purchase that the seller gives to the buyer. It is based on cash or credit. If the product is purchased in cash, then a cash bill is received and if the product is purchased on credit, then a credit bill is received. Note that it is a sales bill for the person who gives it.

Contents of Purchase Bill/Invoice:

Document Number
Date of Document
Seller Details
Buyer Details
Item Description
Quantity
Price
Total, and
Other important details etc.

3. Cash Receipt:

A cash receipt is a document that certifies the receipt and payment of cash, hence it plays an important role in cash transactions. When cash is paid to a party, the payer receives a cash receipt and when cash is received from a party, the recipient issues a cash receipt.

Contents of a Cash Receipt:

Document Number
Date of Document
Issuer Details
Payer Details
Received Amount, and
Other important details etc.

4. Debit Note:

A debit note is a document that is used to debit one’s account and plays a very important role in adjusting one’s account balance. It contains all the information that explains why one’s account has been debited. A debit note is usually issued in a purchase return. Note: For the person receiving the debit note, it becomes a credit note.

Contents of Debit Note:

Document Number
Date of Document
Seller Details
Buyer Details
Reason for issuing document
Item description
Quantity
Price
Total, and
Other important details etc.

5. Credit Note:

A credit note is a document that is used to credit someone’s account and plays a vital role in adjusting one’s account. A credit note contains all the information that explains why someone’s account has been credited. Generally, a credit note is used in sales returns. Note: For the person receiving the credit note, it becomes a debit note.

Contents of the Credit Note:

Document Number
Date of Document
Seller Details
Buyer Details
Reason for issuing document
Item Description
Quantity
Price
Total, and
Other important details etc.

6. Cheque:

A cheque is a document/instrument used to make payment to someone, receive payment from someone, withdraw cash, etc. through a bank and it is given by the bank to its customer. It is not valid unless it is signed by the concerned persons and date plays a very important role in this. There are three parties involved in it, one is the bank, the second is the issuer, third is the receiver and when all three meet, it works.

Contents of the Cheque:

Document/Instrument Date
Document/Instrument Number
Bank Details
Receiver Details
Issuer Details
Signature of the issuer, and
Other important details etc.

7. Deposit Slip:

A deposit slip is a document issued by a bank when a person deposits money in the bank and proves that the bank has received money from the customer. It contains the account number, date, amount, number of notes, signature of the bank cashier, etc.

Contents of the Deposit Slip:

Deposit Date
Deposit Amount
Bank Account Details
Signature of bank cashier, and
Other important details etc.

8. Bank Statement:

A bank statement is a document that the bank gives to its customers and is also called an account statement. It contains details of all the transactions made by the customer in his account. Being an account, it has a debit and credit side. The debit side contains those transactions that decrease the amount of the account, and the credit side contains those transactions that increase the amount of the account. In simple language, withdrawals are shown on the debit side and deposits on the credit side.

Contents of Bank Statement: