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Topic: Source Documents and Journals


  • Meaning and Importance of Source Document
  • Types of Source Document

Meaning of Source Document

Source Document may be defined as original documents on which monetary transactions are recorded, which provide necessary information for the preparation of books of original entry. It can also be defined as original documents on which information is recorded about business transactions.

Transactions are the major feature of any business.  The business transactions take place when goods and services are transferred from one person to another.  There are two types of transaction namely cash and credit transaction.  Cash transaction means that money is paid immediately the transaction occurs.  Credit transaction means that payment for what is bought or sold is made at a later date.

Importance of Source Document:

  1. To originate data for accounting records.
  2. They act as working evidence or as a proof of occurrence of such transactions.
  3. They enable various books of accounts to be opened.
  4. They serve as a source of information.


  1. Explain the types of transaction
  2. State three importance of source document.

Sub-Topic 2: Types of Source Document

Types of Source Documents:

The major types of Source documents are:

(a) Invoice:  This document is usually issued by the seller to the buyer immediately goods are dispatch or services rendered on credit.  It shows the date of sale, description of goods bought or sold, quantity, unit price, total cost.

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(b) Receipt:  This document serves as an evidence of payment for goods bought or sold and services rendered.  Receipts are given or received whenever cash is paid or collected for goods bought or sold or services rendered.  It shows the following particulars:

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