The first documents that exist relating to
Serve as proof for a transaction
◦ Include date and time
Why Source Documents
Normally relate to
List goods or services
provided and their
send an invoice with
goods (or once
services have been
terms (time, # of
Confirm that services or goods have been
Normally relate to cash transactions.
Proof that cash, including currency and
checks, has been deposited in a bank
This is the part of the check kept by the
drawer (writer) of the check as a record
of the transaction.
A report showing
◦ the amount owed
by one business
◦ details of
between the two
Debits and Credits in Chronological Order
What are Journals?
Used to be an actual book.
Now accountants record journal entries
using an accounting program.
What are Journals?
To keep a day-to-day record of a business
and its transactions.
Includes a brief explanation of the
◦ should accurately describe what took place, so
that anyone who glanced at it for the first time
could easily identify what occurred.
Each journal can be matched to the
relevant supporting document
◦ Check stub
A cross-referencing code or folio number
This code or folio number simply crossreferences between one document and
for Source Documents
If the this transaction of $15,000 capital
was made by issuing check number 38,
then one could write “Ch-38” (for
example) under the folio number.
for Supporting Documents
To easily trace the recorded transaction
back to the source document
To verify that the transaction actually took
Why include folio numbers?
Each specific account, such as bank,
would have its own folio number
Used to cross reference from the journal
entry involving “bank” to the bank’s
account in the ledger
◦ This will be covered in the next section.
Make it simple to trace information
through the steps in the accounting cycle.
Folio Numbers for Accounts
“Sal-1” is the individual code for the account
“salaries.” “J-1” is the code for “journal page 1.”
One could follow information from the journal entry to
an account in the ledger, or from an account in the
ledger back to the journal entries.
Cash Receipts Journal – for all cash
Cash Payments Journal – for all cash
Sales Journal – all sales on credit.
Sales Returns Journal – all sales on credit
that have been returned.
Purchases Journal – all purchases on credit.
Purchases Returns Journal – all purchases
on credit that have been returned.
General Journal – for all transactions not
falling under any of the above journals.
The Different Journals
Where you record all cash that has been received.
Major categories of receipts, such as from income or
from debtors, receive their own
The category called “sundry” is used to represent less
regular items, such as capital or receiving cash from
◦ The word sundry means “various,” “miscellaneous” or
The “bank” column is added up to show the total cash
received for the period concerned.
Cash Receipts Journals
Where you record all transactions where
cash has been paid out.
Cash Payments Journal
The cash receipts journal and cash
payments journal can be replaced by the
cash book, which is simply a combination
journal showing all receipts and all
Petty cash, which is simply a sum of cash
on hand kept to pay small expenses, can
also have its own separate journal.
Cash Book & Petty Cash