Topic 5: Source Documents

Question 1

1. What is a source document?

Answer 1

A source document is the original written document that provides details and evidence of the transaction that has taken place.

Question 2

2. State and explain, with an accounting concept, why are source documents important to a business?

Answer 2

According to the Objectivity concept, it states that all business transactions must be supported by objective evidence to act as proof that the transaction has taken place. Hence, source documents are important to the business because they provide evidence that a transaction has taken place.

Question 3

3. Define invoice

Answer 3

A document sent by seller concerning the sale of goods or services on credit.

Question 4

4. Define Credit note

Answer 4

A document sent by the seller to the buyer when there is a return of goods or when the amount is overcharged.

Question 5

5. Define Debit note

Answer 5

A document sent by the seller to the buyer as an additional invoice when the amount is undercharged.

Question 6

6. Define Bank statement

Answer 6

A statement issued by the bank to state the deposits and withdrawals from the business bank account.

Question 7

7. Define Receipt

Answer 7

A document issued by the seller for acknowledging that cash or cheque has been received.

Question 8

8. Define Payment voucher

Answer 8

A document issued by the business as proof of payment by cash or cheque.

Question 9

9. Define Petty cash voucher

Answer 9

A document issued by the business as proof of payment by petty cash.

Question 10

10. Define Memorandum

Answer 10

An internal document that records details related to business transactions. (eg drawing of goods by owner)