In Unit , the need for verifiable objective evidence was mentioned. Instruments serving as such evidence are called source documents. A cash memo, an invoice or bill, a receipt, a pay-in-slip, a debit/credit note, a cheque - serves the purpose. Besides providing documentary evidence, they can also be employed for recording internal events such as depreciation provision, issue of materials from stores to works; they initiate the accounting process; they can be employed as a legal proof in any dispute; they serve in due audit ink of the accounts and to locate fraud, embezzlement, etc.
Cash memos issued by the vendor for sale or purchases against cash are recorded in the cash book. Sale or purchase on credit is covered by the issue of bill or invoice - and these are recorded in Sales book or Purchases book, respectively. A cheque is an order to the bank to pay a specified sum to the bearer or the person named in it. Its counterfoil, with all details of the transaction, is retained by the drawer/issuer: Pay-in-slip provided by the banker is for depositing money into the bank; separate information (or even separate slips) is maintained for payment by cash or by cheque. The counterfoil signed by the cashier, serves as the receipt, and is returned to the depositor. Receipts are issued by the payee (one who receivables paid) when is made to him, as an evidence of the payment having been received from the payer (one who pays). Debit note is an evidence of the debit raised, or to be raised, against a party for various resow -goods returned to a supplier (recorded in Purchase returns book) or if some (additional) amount is recoverable from a customer and hence has resulted in an error (recorded in Suspense book). Credit note is made out when a p,arty is to be given a credit. When goods are received back from a customer (recorded in Sales returns book), a proper credit note is sent to him and a copy of it is retained by the firm for its record. Both debit and credit notes must be signed by both parties concerned as evidence of having agreed on the facts noted in the notes.
Source documents also include - supply order (asking for supply of materials at agreed terms), work order (commanding works to be done at agreed terms), wage sheet (as evidence of wages having been disbursed), gate keeper's books and gate passes/challans [as evidence of goods having (or likely to have) come in or passed out], or any correspondence bearing on the transaction - including legal notices, post-office receipts for letters sent out, etc.
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