Working from source documents
Objective: Extract date, amount, parties, and terms from source documents.
Recommended first: Collections, advances, and owner withdrawals
Source documents are the evidence behind every entry. An invoice you send records revenue and a receivable. A bill you receive records an expense or asset and a payable. A receipt shows payment. A bank statement shows what the bank recorded.
What to look for
- Date: when did the transaction occur?
- Parties: who is the customer or supplier?
- Amount and line items: what was bought or sold?
- Terms: when is payment due, and is there a discount?
Source documents also tell you what not to record. A purchase order is a request, not a transaction; nothing is recorded until goods or services are received. A quote is not an invoice. A supplier statement summarizes bills you should already have. Learning to recognize which document triggers an entry is a practical skill employers look for.
When documents conflict — for example, a bill amount differs from the delivery note — flag it for review instead of choosing one.
Check your work
- Which document triggers the entry?
- Do the date, amount, and terms match across documents?
- Are there facts you need that the document does not state?
A newspaper bill dated March 10 for $180 of ads that ran in March, payable April 9.
| Account | Debit | Credit |
|---|---|---|
| Advertising Expense | $180.00 | |
| Accounts Payable | $180.00 |
Common mistakes
✗ Recording an expense on the payment due date.
✓ Record it when incurred — the service date or bill date.
Guided practice
Use hints freely here.
Item 1 of 2
Advertising on account
On Mar 10, 2026, Rise & Shine Bakery receives a $120.00 invoice from a local newspaper for ads that ran this month. It will pay next month.
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Independent practice
Try these without hints. Completing the lesson needs at least one independent item solved without revealing the answer.
Item 1 of 8
Pay three months' rent in advance
On Mar 1, 2026, Northlight Design Studio pays $3,900.00 covering studio rent for the next three months.
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Key terms
- Source document
- The evidence that a transaction happened.
- Invoice
- A document requesting payment for goods or services provided.
- Bill
- A supplier's invoice received by the business.
- Payment terms
- When payment is due and any early-payment discount.
References and provenance
- OpenStax, Principles of Accounting, Volume 1: Financial Accounting (accessed 2026-10-29)
Original lesson written for Bookkeeping Exercises (AI-assisted drafting). Calculations are verified by the platform's automated accounting tests. Not yet reviewed by a credentialed accountant. Updated 2026-10-29.