FABM LESSON 7

• What are source documents in the accounting industry?

  Receipts, bills, invoices, statements, checks
• Why are source documents important in accounting?

  They document transactions for accounting processes
• What information does a source document capture?

  Names, amounts, date, transaction substance
• How does pre-numbering of source documents help businesses?

  It helps identify missing documents
• What are the alternative names for source documents in a merchandising business?

  • Business Documents
  • Evidence of transactions
  • History tracking of accounting records
• What is the first importance of source documents?

  Evidence of payment for transactions
• How does a source document provide evidence of payment?

  It confirms a transaction occurred in the past
• What is the second importance of source documents?

  Record to the books of accounts
• How are source documents used to record transactions?

  They are directly recorded into the books of accounts
• What is the third importance of source documents?

  To perform an audit trail
• How do auditors use source documents?

  To verify figures in financial statements
• What is the fourth importance of source documents?

  Eases the job of auditors
• Why is keeping regular records of source documents beneficial for auditors?

  It simplifies their examination process
• What is the fifth importance of source documents?

  Future references for past events
• How do source documents serve as future references?

  They provide evidence for management or users
• What is the sixth importance of source documents?

  Avoiding fraud
• How do source documents help in avoiding fraud?

  They provide evidence of transactions
• What is the seventh importance of source documents?

  Used for control purposes
• How do source documents function as internal control tools?

  They help detect errors in accounts
• What are some commonly used source documents?

  1. Purchase Invoice
  2. Sales and Purchase Orders
  3. Delivery Receipts
  4. Debit and Credit Memoranda
  5. Vouchers
  6. Official Receipts
• What is a purchase invoice?

  Issued by seller to indicate merchandise delivery
• What is the purpose of a sales invoice?

  Basis for recording sales revenue
• What details are included in a sales invoice?

  Name, tax details, date, amounts, signature
• What is a sales order?

  Prepared when a buyer wants to purchase
• What details are included in a sales order?

  Buyer's details, goods description, units ordered
• What is a delivery receipt?

  Confirms merchandise delivery to billing address
• What details are included in a delivery receipt?

  Seller's details, buyer's details, units delivered
• What is a credit memorandum?

  Reduces amounts receivable from a customer
• What is a debit memorandum?

  Reduces amounts payable to a vendor
• What is a payment voucher?

  Attached to documents requiring payment
• What is a cash voucher?

  Approval of payment in cash
• What is an official receipt?

  Acknowledges receipt of cash or check
• Why is an official receipt required by the BIR?

  To avoid understatement of revenues
• What important details are found on source documents?

  • Date
  • Official number
  • Nature of the business
  • Other relevant transaction details