Track 1 · Debits, credits and double entry
Source documents
Sales invoices, supplier bills, receipts and bank statements: identify the document behind a transaction and record what it supports.
You will be able to
- Name the source document for common transactions.
- Read the information an entry needs from a document.
- Recognise documents that don't support an entry, such as orders, quotes and statements.
Builds on
Every journal entry should point to evidence. Source documents prove that a transaction happened and give its date, the parties, what was delivered and the amount. Without them, nobody — a manager, an auditor, a tax inspector, or you in six months' time — can check that an entry is real and right.
What to read from a document
Before writing an entry, read the document like an accountant:
- Who issued it, and to whom? A sales invoice issued by Lumen means a client owes Lumen; an invoice issued to Lumen means Lumen owes a supplier.
- The date — which decides the period the entry belongs to.
- What was delivered — goods or services, and whether they are something used now (an expense) or kept for years (an asset).
- The amount and the terms — "paid", "paid by card" or a receipt means cash has moved; "due in 30 days" means it hasn't.
- The reference number, which you store with the entry so anyone can trace from the ledger back to the evidence. Numbered documents also reveal gaps and duplicates.
Documents that don't create entries
Some documents are part of the process but don't record a transaction:
- A quote is an offer, and a purchase order is a request. Until the goods or services are delivered, neither side has performed.
- A supplier statement lists invoices and payments already sent. It's a useful check on what you owe, but it is not a new invoice — recording it would double-count.
- A delivery note confirms goods arrived. It supports the purchase together with the supplier's invoice.
| Document | Issued by | Supports |
|---|---|---|
| Sales invoice | The business | A credit sale (debit receivables, credit revenue) |
| Supplier invoice (bill) | A supplier | A purchase on credit (debit asset or expense, credit payables) |
| Receipt | The seller | A payment made on the spot (credit cash) |
| Bank statement | The bank | Bank fees, interest and transfers you may not have recorded yet |
| Payroll summary | Payroll | Salaries, deductions and amounts owed to staff |
| Purchase order or quote | The business / a supplier | Nothing yet — a request or an offer, not a transaction |
| Supplier statement | A supplier | Nothing new — a summary to check against your own records |
| Step | Document | Entry? |
|---|---|---|
| 1 | Quote received from the supplier | No |
| 2 | Purchase order sent to the supplier | No |
| 3 | Goods arrive with a delivery note | Yes — the purchase, usually posted from the invoice that matches the delivery note |
| 4 | Supplier invoice received and matched to the order and delivery note | (Same entry: debit asset or expense, credit Accounts payable) |
| 5 | Payment made; remittance advice sent | Yes — debit Accounts payable, credit Cash at bank |
Matching the order, the delivery note and the invoice before approving payment is one of the most basic controls against paying for goods that never arrived.
Practice
Practising as a guest — attempts aren't saved.
Exercise 1 · Classify
Which source document would Lumen use as evidence for each transaction?
Exercise 2 · Journal entry
Record the entry supported by this document.
Exercise 3 · Journal entry
Lumen has just issued this invoice. Record the entry it supports.
Exercise 4 · Journal entry
Record the entry supported by this receipt.
Exercise 5 · Journal entry
Lumen's April bank statement shows a line you haven't recorded. Record it.
Exercise 6 · Concept check
On 3 April Lumen sends Pinecrest Electronics a purchase order for two monitors costing 960. They are due to arrive on 9 April. What should Lumen record on 3 April?
Exercise 7 · Sequence
Put the documents in a normal credit purchase in the order they appear.
Exercise 8 · Journal entry
Challenge: on 30 April three documents are waiting on Lumen's desk. Post whatever entry they require — only what they require.
Key points
- Every entry needs evidence: invoices, receipts, bank statements, payroll records.
- Read who issued the document, the date, what was delivered, the terms and the amount.
- Quotes, purchase orders and supplier statements don't create new entries.
- Store the document number with the entry so the audit trail runs both ways.
Content review: answers and figures are checked by automated tests against the accounting engine, and the text has had an internal review against the standards; independent review by a qualified accountant is pending.