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Business Transactions and Source Document

After you secured first-class in your examination, as promised, your father wishes to buy you a mobile phone. You go to the shop along with your father to buy a mobile phone. The dealer gives a cash memo along with the computer and in exchange your father makes cash payment of Rs.15, 000. Purchase of mobile phone for cash is an example of a transaction, which involves reciprocal exchange of two things:
  1. Payment of cash,
  2. Delivery of a mobile phone.
Hence, the transaction involves this aspect, i.e. Give and Take. Payment of cash involves give aspect and delivery of computer is a take aspect.

Thus, business transactions are exchanges of economic consideration between parties and have two-fold effects that are recorded in at least two accounts.

Business transactions are usually evidenced by appropriate documents such as Cash memo, Invoice, Sales bill, Pay-in-slip, Cheque, Salary slip, etc. A document which provides evidence of the transactions is called the Source Document or a Voucher. In certain types of expenses, like petty expenses there may be no documentary evidence.

In such cases voucher may be prepared it shows the necessary details of purchase and with the approval by appropriate authority of the firm. All such documents (vouchers) are arranged in chronological order and are serially numbered and kept in a separate file. All the recordings in the books of account are done on the basis of vouchers.

Figure 3.1: Showing specimen transaction voucher



                                 Transaction Voucher

                                       Name of Firm :


Voucher No       :

Date                   :

Debit account   :

Credit account :

Amount (Rs.)    :

Narration           :



Authorised By    :                                           Prepared By:

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