Source documents and their role in accounting

Question 1

What are source documents?

Answer 1

Source documents are evidence that a financial transaction has occurred and provide details of the transaction.

Question 2

what are the functions of source documents?

Answer 2

Provide verifiable evidence of a transaction.
Ensure Accounting reports provide faithful representation of real-world events.
Provide evidence required by the ATO for income and GST obligations.

Question 3

What is goods and services tax (GST) and how is it calculated?

Answer 3

GST is a 10% tax levied by the federal government on the sale of goods and services.
To verify & calculate GST:
Businesses must track GST on sales/services or purchases (owed to the ATO).
Find included GST = %11
add GST = x0.1
GST collected by the business when cash sales are made is owed to the Government, as it collected by the business on behalf of the ATO.

Question 4

what are cash transactions and source documents?

Answer 4

When Cash Is Received
Source Document: Cash Receipt
Can be handwritten, electronic, or from a register (includes EFTPOS/credit card info)
Must include:
Date of transaction
Amount received
Reason for transaction
GST amount
Total price including GST

Question 5

what is a bank statement?

Answer 5

A bank statement shows all cash transactions over a time period.
Two Main Functions:
List all transactions.
Identify unknown transactions like:
Direct debits (e.g. bank fees)
Direct credits (e.g. interest or deposits)

Question 6

whats a cash reciept?

Answer 6

A transaction where cash is received by a sale of a good/service.

Question 7

whats a cash payment?

Answer 7

Transactions where a business is purchasing a good/service via cash

Question 8

whats a sales invoice?

Answer 8

A transaction where there is a sale of a good/service on credit, to be payed at a later date.

Question 9

whats a purchase invoice?

Answer 9

Transactions where a business is purchasing a good/serice via credit, to be payed at a later date

Question 10

whats a credit note?

Answer 10

Issued when Goods are returned, in store credit

Question 11

whats a statement of aaccount?

Answer 11

A statement of account is provided to credit customers to give details of transactions that have occurred over a specific period of time and the resulting balance owing at the end of that period.

Question 12

whats a delivery docket?

Answer 12

-Verifies that goods delivered = goods ordered
-Not used for tax (no prices/tax info)
-Still includes order details

Question 13

whats shipping and order confirmation?

Answer 13

-Proves that an order has been dispatched
-May include tracking numbers

Question 14

whats a memo?

Answer 14

-Used when a transaction occurs within the business and other documents don’t apply
-Describes the transaction and requests it be recorded