An invoice is issued for a transaction that is:

A credit sale or purchase — The invoice is a source document for a credit sale or purchase.

The document that is evidence of money received is the:

Receipt — A receipt is evidence that money has been received.

A credit note is issued when:

A customer returns goods — A credit note is issued by the seller when a customer returns goods or has been overcharged.

A sales invoice is recorded in the:

Sales journal — The sales invoice is the basis for entries in the sales journal.

A shop sells goods for RM900 on credit, then the customer returns RM150 of goods. The customer's balance owing is:

RM750 — RM900 − RM150 (credit note) = RM750.

The document that is evidence of a payment through the bank is the:

Cheque counterfoil — The cheque counterfoil is a source document for a payment through the bank.

A debit note may be issued to:

Add a charge for an undercharge — A debit note adds a charge to the customer, for example when the original invoice undercharged.

A receipt is recorded on which side of the cash book?

The receipts side — A receipt is evidence of money received, so it is recorded on the receipts side of the cash book.

Which of the following is NOT a source document?

Quotation — A quotation is a non-source document; it is not used to record accounting entries.

SPM Prinsip Perakaunan — Source Documents Notes & Exercise

Source documents are the original documents that form the basis for recording transactions in the books of first entry. Each type is issued for a specific purpose and is linked to a different book.

Types of Source Document

Invoice — issued for a credit sale or purchase. Recorded in the sales journal or purchases journal.
Receipt — evidence that money has been received. Recorded on the receipts side of the cash book.
Credit note — issued by the seller when a customer returns goods or has been overcharged. Recorded in the sales returns journal.
Debit note — issued to add a charge to a customer (for example, an undercharge) or to record purchases returns.
Cheque counterfoil — evidence of a payment through the bank; recorded on the payments side of the cash book.

Key idea

Invoice → credit sale/purchase. Credit note → returns (reduces the debt). Debit note → additional charge. Receipt and cheque → movement of money.

Example

Aiman's Shop sells goods worth RM1,200 on credit to Ms Siti and issues an invoice. Ms Siti returns faulty goods worth RM200, so Aiman's Shop issues a credit note for RM200. Ms Siti's balance owing is now RM1,000. When she pays by cheque, Aiman's Shop issues a receipt.

Discounts on an Invoice

An invoice usually states a trade discount, a reduction on the list price given before the net amount is recorded. A trade discount is not entered as a separate item in the books — only the net value after the discount is carried to the sales journal or the purchases journal. This differs from a cash discount, which is recorded in the cash book as an incentive for prompt payment. Understanding each source document and the book of first entry it feeds helps a student follow the flow of information from the real transaction all the way to the ledger and the final financial statements.

Remember

A credit note is issued by the seller and reduces the amount the customer must pay. Do not confuse an invoice (a credit sale/purchase) with a receipt (proof that payment has been received).