Match the document to the event, and to the side of the transaction you are on. A credit sale creates an invoice, a return creates a credit note, and a payment creates a receipt.
This lesson is part of the source documents chapter. The documents you choose here are recorded in the books of prime entry.
Which document belongs to which event?
| Event | Document | Issued by |
|---|---|---|
| Goods sold on credit | Invoice | Seller |
| Goods sold for cash | Cash bill | Seller |
| Customer returns goods | Credit note | Seller |
| Payment received | Receipt | Person receiving the money |
| Cheque paid out | Cheque counterfoil or payment voucher | Payer |
| Cash banked | Bank deposit slip | Bank or depositor |
Some textbooks also use a debit note to increase an amount owed, for example after an undercharge.
Worked example: one purchase, three documents
Hasnah’s Shop buys goods on credit from Sinar Borong. Follow the events in order.
- Sinar Borong delivers goods worth RM1 200. It issues an invoice, which Hasnah keeps as a purchase invoice.
- Hasnah returns damaged goods worth RM180. Sinar Borong issues a credit note for RM180.
- Hasnah pays the balance of 1 200 − 180 = RM1 020 by cheque. She keeps the cheque counterfoil, and Sinar Borong issues a receipt.
The same seller issues a different document at each event, and each one supports a different entry in the books.
The mistake that costs marks
The slip students make most is to name a receipt as the document for a credit sale. The customer has not yet paid, so there is nothing to receive.
| Step | Wrong | Right |
|---|---|---|
| Event: goods sold on credit | Receipt | Invoice |
| What the document says | “Payment received” | “Payment is due” |
| When a receipt is used | At the sale | When the customer pays |
A quick test is to ask whether money has moved. If it has, the document is a receipt or a cash bill. If it has not, it is an invoice or a credit note.
Check yourself
Name the source document for each event: (a) a customer buys RM60 of goods and pays cash at once, (b) a customer returns RM90 of goods bought on credit, (c) the business pays a supplier RM500 by cheque, (d) the business sells RM700 of goods to a customer on credit.
Answer
(a) Cash bill, since cash was paid at once. (b) Credit note, issued by the seller to reduce the amount owed. (c) Cheque counterfoil or payment voucher, kept by the payer. (d) Invoice, because the customer has not yet paid.
What to study next
Next, read what each document shows in reading invoices, credit notes and receipts. You can log any wrong choice in the mistake log and paper-error review tool.
If you want a teacher to go through documents with you, see online one-to-one Accounting tuition.