Assignment on Business Management

SYNOPSIS

Accounting-Knowledge Level

Prepared by Mohammad Shahidul Islam MBA, ACA

KNOWLEDGE LEVEL, ACCOUNTING

LECTURE-3 & 4, AUGUST 10, 2012

SOURCE DOCUMENTS & BOOKS OF ORIGINAL ENTRIES [CHAPTER-3]

&

PREPARING BASIC FINANCIAL STATEMENTS [CHAPTER-5]

After studying these Chapters, you shall be

able to understand:

Chapter-3:

 Source documents

 Books of original entries

 Cash book and imprest cash book [MATH]

 Payroll recording [MATH]

Chapter-5:

 Errors in trial balance

 Definition of extended trial balance

 Preparation of extended trial balance [MATH]

LEARNING OBJECTIVES

Previously, several questions came from these

two Chapters.

For exam point of view, from Chapter 3 most

important part is payroll calculation. In

November-December 2011 session a math on

Payroll accounting was set for 9 marks. Short

theory may also come from petty cash book

under imprest system.

From Chapter 5 one most important theory is

errors in trial balance. This theoretical

question has already been set in the

November-December 2011 session.

Preparation of work sheet i.e. Extended Trial

Balance is also important for mathematical

type question.

SYNOPSIS

Accounting-Knowledge Level

Prepared by Mohammad Shahidul Islam MBA, ACA

SOURCE DOCUMENTS & BOOKS OF ORIGINAL ENTRIES

[CHAPTER-3]

Source Documents

Theory [Tricky question]

Source Documents are documents from which first transaction is recorded in the books of accounts of a

Company. Examples of source documents are as under:

 Purchase invoice

 Sales invoice

 Credit note

How these are source documents? To answer this question it requires understanding of purchase / sales

process.

Purchase process/ Sales process:

In the above process only invoices (Purchsase/sales) and credit notes are called source documents,

because, from these documents financial transactions are recorded in the books of original entries.

Suggested Questions:

1. What is source document? Give example of some source document?

2. Why credit note is source document, debit note is not?

3. What information is included in a standard Invoice?

4. What is debit note and credit note? Who prepare these two documents and on whom?

Answer: Credit note: a document issued to a customer relating to returned goods or refunds when a

customer has been overcharged for whatever reason.

Debit note

PO is placed

to the best

bidder

Quotation requested

Purchaser asks for

quotation from vendors

with his specification

Comparative analysis

After receiving

quotations, comparative

analysis is made and

Purchase

order

PO is placed

to the best

Goods Received

Note

GRN is prepared

while receiving

Invoice

After receiving of

GRN, purchaser

receives invoice

Debit note

Goods

returned, If

not as per

Remittance advice

Receiving of payment

advice from supplier

Payment

Settlement after

payment

SYNOPSIS

Accounting-Knowledge Level

Prepared by Mohammad Shahidul Islam MBA, ACA

INVOICE as source document:

[1] Invoice

[2] Preparer: ABC Company Ltd.

63 Dilkusha C/A

Dhaka-1000

[3] Invoice no. 750 [4] Date: 10 June 2012

[5] Receiver: Rahman Ship Breakers

5 Station Road. Comilla

[6] Condition: