Amazon Payment

If you handle accounting, you must have noted that some documents always crop up in your reports. When accounting, we record financial transactions, analyze them, and make reports.

The importance of accounting to a business cannot be overemphasized more, especially as oversight agencies and tax authorities need these financial statements for various reasons.

Here are things to cover in this article:

  1. TOP-20 Accounting Documents
  2. How to Automate Extraction from Receipts
  3. Important Tips for Handling Accounting Documents
  4. FAQ about Accounting Documents

Knowing what documents to use is just one part of the bigger picture.  Here we compile a list of the most frequently used documents in accounting.

TOP-20 Accounting Documents

1. Cash Memo

Businesses use cash memos as source documents. It is here that we record all sales and purchase transactions. It is one of the most recurrent accounting documents, which a business gives when it makes cash sales or receives in case of a cash purchase.

The cash memo contains details such as the number of sales, price of goods, applicable discount, and sales tax. Transactions in the cash memo go into the book of accounts and the auditor will always look to cross-reference the cash book and the cash vouchers.

2. Invoice

An invoice is also called a bill. Business must record all their credit sales or credit purchases in this document. For example, when a firm makes sales on credit, it prepares a sales invoice. It details the transaction in terms of the number of goods sold, the price per item, and the total amount sold. The same applies to purchases.

Invoices usually are written in duplicate, with the main (original) copy given to the buyer while the seller keeps the duplicate.

An invoice becomes a bill when the buyer or purchasing entity receives the original invoice copy.

3. Receipt

Businesses use the receipt as proof of payment for goods and services. It is a source document that a seller prepares on account of receiving cash from a second party.

Also prepared in duplicate, the original copy goes to the person giving out cash or paying. The seller keeps the duplicate as a record of the transaction and will show payment details including name, date, the total amount paid, and type of payment (cash/cheque).

4. Pay-in-Slip

The pay-in-slip is a proof of transaction document received from a bank for depositing money into a bank account.

The process involves filling up a form at the bank, with details of the depositor, date of transaction, and amount deposited.

Pay-in-slip must be signed by the bank clerk with the official bank stamp on the counterfoil. Bookkeepers use the pay-in-slip counterfoil as a source document for recording the transaction.

5. Cheque

The cheque is one of the most used financial accounting documents. The document is used for financial transactions and is payable once presented to a specified banker. The cheque is an unconditional order in which an entity signed signs directing the banker to pay a certain sum of money. The payee is the person whose details appear on the instrument.

Cheques can be “crossed” which means the cheque is payable to the account of the payee only.

6. Debit Note

We use the debit note as an evidence document. The note is sent to an individual or business against which we have the debit. Businesses draw debit notes against entities from which they anticipate recovering certain amounts of money. For example, if you draw a debit note to a supplier, you expect them to return defective or damaged goods.

Businesses also use a debit note in cases where there is an overpayment. You must indicate all the necessary details in a debit note, including the date and amount debited.

7. Credit Note

Businesses use a credit note to show that they have credited a given party as indicated on the document. The document is written, for example, to a purchaser to show that the business has credited that transaction in their books.

You can prepare a credit note in case you make a payment that turns out to be less than it should have been.

Details are like in a debit note. However, easily be distinguished between the two by the red ink used to write the credit note.

8. Voucher

A voucher is a business document that records what type of transaction is to be recorded in financial books. Vouchers are prepared using source documents and identify transactions as debit and credit.

There are two types of vouchers:

  • Cash Voucher
  • Non Cash Voucher

Cash vouchers include receipt and cheque payments while non-cash vouchers involve debit note and credit notes.

9. Remittance Advice

We use the Remittance Advice to detail payments sent to a supplier, including whether it’s an invoice or offset credit note. And if the customer is paying with a check, the remittance advice will be sent along with the check. In that regard, remittance advice is different from a payment receipt, since it originates from the customer.

10. Account statement

This is a document sent out by a supplier to a customer listing the transactions on the customer’s account, including all invoices and credit notes issued and all payments received from the client.

11. Quotes

When sourcing for goods or services, a business will often seek price quotations from different suppliers. The suppliers will send their quotes, in which they describe their products or services, pricing, and delivery terms.

Once the business checks the quotes and selects the best quote, the suppliers will receive a purchase order, based on their quote. In turn, they will supply the goods or services, and then send a purchase order.

During audits of accounts, auditors and tax agents often ask for supplier quotes, to look for signs of fraud. Quotes as source documents are therefore important to the accounting department.

12. Orders

Order documents are sent by the business to a supplier. They bear the description of the products or services, but may not include prices. That’s because a business may want to order supplies, but may not have the updated price list.

However, they are important because the goods delivered or services provided must match the specified requirements in the order documents. An order document can be as simple as an excel page with a list of items, along with a short description.

13. Goods Received Note

As a business, when you receive goods ordered, you have to document the order when it arrives. You do that using a received note, normally at the warehouse.

The goods received note indicates who delivered the goods, who received them, the superficial condition of the goods, and their quantity. The goods received can be used to track inventory, and therefore streamline accounting work.

14. Material Received Note

For manufacturing businesses that receive materials from suppliers, they use a material received note to keep track of their material inventory received. That note details the name of the supplier, the name of the delivery person, what was received, its quantity, date, and inventory location.

It also includes the name of whoever received the goods into the warehouse, their signature, and date. It may also indicate the condition of the received materials.

15. Goods Dispatch Note

When a supplier makes a delivery, the goods are accompanied by a goods dispatch note. That document details what is being delivered, who delivered it, and who received it. Often the receiver has to sign it, indicating they accepted the goods.

The goods dispatch note can be used to back up invoices, or claims of undelivered goods. In that regard, it helps the accounting department do a follow-up on invoices and debts.

16. Sales Order

When a supplier receives a purchase order from a customer, they will create an internal sales order. The sales order is then sent to the sales team, for the sales team to arrange for the delivery of goods.

A copy of the sales order is also sent to the warehouse, to help with inventory management. In that regard, sales orders help the accounting team to coordinate with the sales team.

17. Purchase Order

A purchase order is a document that a buyer prepares and sends to a seller or supplier when they want to purchase goods or services. This document usually contains a detailed order request for the supplier to go through to ascertain if they can supply the requested goods. The company that makes use of a purchase order provides a significant amount of control over how they spend their money by creating a seamless and transparent method of requisition.

Once a purchase order is received by a supplier, it gives them the necessary information to decide if they can fulfill what is required by the customer. As a result, this document significantly reduces the chances of incorrect or incomplete fulfillment of orders.

18. Employee Time Sheet

Employee timesheet is an important accounting document that must be used by any serious business that employs staff. This document allows a business to keep track of the amount of time spent by staff working each day. The employee timesheet is typically a document, which presents time logs in a tabular format, either physically or digitally. This document is critical in ensuring that employees are accurately compensated for the work they do without short-changing the business. Therefore, a well-managed employee timesheet ensures productivity and allows a business to manage its finances efficiently and effectively.

19. Packing Slip

A typical packing slip may include shipment details such as stocking keeping number, dimensions of the package, the weight of the package, and unit number. The information that is included on a packing slip helps the accounting department to get the actual number of items that have been shipped. Likewise, it ensures that the right shipment has been made. Once a shipment has reached its destination, the recipient can easily compare the packing slip against the received items to ensure the right items have been received.

20. Deposit Slip

A deposit slip is a document that is invaluable for the management and control of transactions within a bank as it makes accounting easy. When an individual goes to deposit money in cash or as a cheque into a bank, the teller usually hands them a deposit slip to fill. Information such as account name, account number, amount of money in cash or as a cheque, and more must be written when filling the deposit slip. Once the slip is filled and submitted, a receipt is presented to the depositor and a deposit slip is filed away to facilitate recordkeeping.

How to Automate Extraction from Receipts

  1. Check Out a Sample Scanned Receipt
  2. Setup PDF.co
  3. Choose Document Parser Configurations
  4. Run & Test Document Parser
  5. See the Parsed PDF Result
  6. Template Creation Guide

Step 1: Check Out a Sample Scanned Receipt

In this little guide, you will learn how to automate text extraction from scanned PDF receipts with the help of PDF.co and Zapier integration. It can be handy when you have tons of receipts every day.

All the data will be extracted from this scanned PDF receipt except for the addresses. If you want to join the process, see the receipt sample here and the template here.

 

Sample Scanned PDF Receipt
Sample Scanned PDF Receipt

 

Step 2: Setup PDF.co

Initially, a scanned PDF receipt is stored in the Google Drive folder. If you need to learn how to set up this step, go here.

We will jump straight to the Action Step. Kindly choose PDF.co as the App and the Document Parser as the Action Event.

Use PDF.co Document Parser To Extract Text From Receipt

Step 3: Choose Document Parser Configurations

Here’s how you can set up the Document Parser.

  • Select the scanned PDF receipt link in the Input field.
  • Enter the ID for the receipt’s template in the Template Id. We have a separate tutorial on how to create a template below.

Configure Document Parser

Step 4: Run & Test Document Parser

Let’s run & test our configuration at PDF.co. If the test runs successfully, it means that we set everything up correctly.

Test Document Parser Configuration

Step 5: See the Parsed PDF Result

Great! PDF.co processed our request successfully and returned the parsed text from the scanned PDF receipt.

 

Parsed Text From Scanned PDF Receipt
Parsed Text From Scanned PDF Receipt

 

Step 6: Template Creation Guide

Here you will find out how to create the template for this specific scanned PDF receipt.

First of all, go to your PDF.co account and click on the Document Parser. On the top, you can do a right-click on the New Template link to open the Online Template Editor. Here’s a direct link https://app.pdf.co/document-parser/templates/new

Secondly, click on the Load Test PDF or Image button to open the scanned PDF receipt. One of the options is to copy and paste the sample template in this folder in the Edit Template to run the template straight away or start from scratch.

Online Template Editor
After that, just click on the +Add Object button and choose the Add FIELD based on TEXT SEARCH. It will parse all the non-table text such as Company Name, Receipt #, etc.

To get the Company Name, we can use the $$funcFindCompany special function. This will locate the first company name that it finds in the document. This can be added in the Expression field. Don’t forget to check the Regex box every time you use the macros, special functions, and regular expressions.

Parse Company Name
To get the Receipt #, add RECEIPT{{Spaces}}#{{Spaces}}(?<value>{{AnythingGreedy}}) in the Expression field and check the Regex check box.

Parse Receipt Number
Getting the Bill To name and Ship To name is a bit complex. You can use {{LineStart}}{{Spaces}}(?<value>{{SentenceWithSingleSpaces}}){{Spaces}}{{SentenceWithSingleSpaces}}{{Spaces}}RECEIPT DATE to get the Bill To name and {{LineStart}}{{Spaces}}{{SentenceWithSingleSpaces}}{{Spaces}}(?<value>{{SentenceWithSingleSpaces}}){{Spaces}}RECEIPT DATE to get the Ship To name.

To get the table items, we will use the ADD TABLE field based on TEXT SEARCH object. Add the following to the Expression field to get all the items and click the Run Template button to see the result.

{
  "start": {
    "expression": "QTY{{Spaces}}DESCRIPTION",
    "regex": true
  },
  "end": {
    "expression": "Subtotal{{Spaces}}{{Number}}",
    "regex": true
  },
  "row": {
    "expression": "{{LineStart}}{{Spaces}}(?{{Digits}}){{Spaces}}(?{{SentenceWithSingleSpaces}}){{Spaces}}(?{{Number}}){{Spaces}}(?{{Number}})",
    "regex": true
  },
  "columns": [
    {
      "name": "qty",
      "dataType": "integer"
    },
    {
      "name": "description",
      "dataType": "string"
    },
    {
      "name": "unitPrice",
      "dataType": "decimal"
    },
    {
      "name": "amount",
      "dataType": "decimal"
    }
  ]
}

Parse Table Items
The template can be saved, and you can get the Template ID by clicking on the Save Template and Return button.

Important Tips for Handling Accounting Documents

After knowing the most important accounting documents, a seller has to understand how to use them to get the best results. Some of these documents act as proof of sales, and therefore, they should be perfect when the controlling agencies come asking for them. Additionally, accounting documents can be changed at any time, so, a seller should know how to update them with the required details. However, as long as one understands the accounting process and knows how to meet local laws’ requirements, everything will be fine. The following tips can make the handling of these documents easier.

Always Keep an Electronic Copy of Accounting Documents

After preparing cash memos, receipts, and other documents in accounting, a seller should create an electronic copy too. Nowadays, it is easy to manage electronic copies because they do away with the clumsiness associated with hard copies. For instance, they can be retrieved with ease, and they can be stored more safely.

They will help to clear the office of too many documents that may no longer be useful. However, the most significant advantage of electronic copies is that they act as a backup for the rest of the records. If the hard copy gets lost, it can be retrieved and printed. Therefore, these copies will help to solve disputes in the absence of hard copies too.

Be Thorough with Financial Accounting Documents

The documents used in accounting require data from various sources, and it is used for specific purposes. For example, cash memos are filed with data regarding the sold items. Because of that, the seller has to ensure that all details are captured in the documents. It becomes even more important when these documents are used as proof of sales.

In that case, the seller will be in a difficult spot if they do not thoroughly check the details. A look at the accounting document list shows that each one needs to capture data for specific purposes, and it is good to keep it in mind when using them.

Use a Variety of Business Documents in Accounting

The diversity of accounting documents is an indication that a seller should not rely on one option. If one knows the importance of source documents in accounting, they would know that using them in different forms can bring lots of benefits.

For example, when working with various types of cash memos, it will be easy to identify the one that captures sales data best when there is a variety. When using a receipt as a source document, you may want to know if there is a type that captures more details than the others.

Also, consider consulting a professional accountant when working with accounting documents.

An expert knows how to identify errors and inconsistencies, and they will help fix them to make financial statements accurate. It is more important when doing it for tax compliance purposes.

In addition to that, accountants know what the authorities look for when they ask for financial information, and so, they will help business owners to avoid fines and other penalties.

FAQ about Accounting Documents

Source Document in Accounting

What is a Source Document in Accounting?

In accounting, a source document is created when a business spends or receives money. An example of a source document is a receipt, bill, statement, invoice, check, purchase order, and any other transaction document.

Which is not a Source of Document?

Any document that does not have original transaction details is not a source document. That’s the case with any document whose transaction details were extracted from another transaction document.

For instance, a cash memo is not a source document because its details are extracted from receipts, bills, and invoices.

Source Documents Required for Accounting

There are eight types of source documents required for accounting when a transaction occurs. They are used to generate a paper trail, which makes it easy to audit business transactions and keep track of sales and expenditures.

These source documents of accounting are quotes, purchase orders, delivery dockets, sales and purchase invoices, debit notes and credit notes, checks, payment advice, and receipts.

An Important Production Document is a Route Card

A route card or route sheet is one of the most important production documents. Businesses use it to outline the manufacturing operations in a specific sequence and the machines that are used in each of the listed operations.

The document also lists the department in which the production will occur and the next department the product will move to for the next operation. The other production documents are design sheets, a list of materials, and control charts.

Most Important Document of a Company

The most important document of any company or business is its memorandum of association. It guides and defines a company’s operations, indicating what the company can and cannot do.

Therefore, this being the most important document of a company means institutions such as banks and investors can request a company’s Memorandum of Association before they start a business relationship with it.

Documentation – Document Preparation Process

The process of preparing a document is called documentation, and businesses need it because their documents are often reviewed, edited, and approved by more than one person.

A documentation process helps to save time by eliminating missteps and confusion among the parties involved in creating the business’s documents.

The most common steps involved in the documentation process include setting the stage for creating a new document, initial drafting, interim drafting, and final drafting of the document.

Customer Payment Receipts and Transaction Record

Document type for customer payment

When a customer makes a payment, they are issued with a receipt. The receipt acknowledges the payment received, and it includes the transaction details. Often it is issued after a customer pays an invoice with cash.

When does an accountant record a transaction?

An accountant records a transaction when the business receives funds or spends funds. And if the company wants to create a cash flow statement, balance sheet, and income statement, then the accountant has to create a double-entry accounting.

Who Prepares a Debit Note?

A seller or buyer can create a debit note. Sellers use debit notes to inform buyers how much debt they have. The seller will include information about an upcoming invoice or funds due.

For a buyer, they can create a debit note when they return goods they received on credit. In that case, it will include an inventory of returned goods, the reason for their return, and anticipated credit.

Documents Used for Timekeeping

A time sheet or timesheet is a document used for recording the time workers spend on each task. Traditionally, it was a sheet of paper with data recorded in a tabular format. Today most timesheets are in digital format.

Financial Documents List

Financial documents show the source of a company’s money, how the money was used, and where the money is now. Here is a list of financial documents that are most important for businesses.

  • Balance sheets
  • Income statements
  • Cash flow statements
  • Statements of shareholders’ equity

Cash Memo in Accounting

Businesses use a cash memo to track receipts and payments for business-to-business transactions and for business-to-consumer transactions. It is a legal document, and it is the equivalent of an invoice copy. You can use a cash memo to verify cash sales, pay taxes, and reconcile accounts.

Conclusion

Accounting documents play a critical role in the handling of business transactions and the preparation of financial statements like the income statement and balance sheet. They are also needed for compliance and tax records. Businesses are now automating many of the accounting processes, and the software a business chooses could be a great addition to keeping financial records.