Source Documents for Bookkeeping: Capturing Proof of Every Transaction

What “Source Documents” Are and Why They Matter

A source document is the original evidence that a transaction happened. It answers the basic questions you need before you record anything: who was involved, what happened, when it happened, how much it was, and how it was paid (or will be paid). When you keep source documents organized, you can post transactions accurately, support tax reporting, and resolve disputes quickly.

In practice, source documents are the “proof” you rely on when entering data into your bookkeeping system. If the proof is missing or unclear, the bookkeeping entry becomes guesswork—and that causes errors later during posting, review, and reconciliation.

Core Fields to Capture on Any Source Document

Different documents look different, but you should train yourself to locate the same core fields every time. Use this checklist when reviewing any document:

• Date (transaction date and, if different, invoice date and due date)
• Vendor/Customer (legal name, store name, or payer/payee)
• Description (what was purchased/sold; quantity; reference numbers)
• Amount (subtotal, discounts, shipping, total)
• Tax (sales tax/VAT/GST amount and rate, if shown)
• Payment terms (paid now vs. pay later; due date; early-payment discounts)
• Payment method (cash, card, bank transfer, check, ACH; last 4 digits if available)
• Document number (invoice number, receipt number, transaction ID)

Step-by-step: A fast “document check” before you file

1. Confirm the date is visible and makes sense for the period.
2. Confirm the party (vendor/customer) is identifiable.
3. Confirm the total and whether tax is included.
4. Confirm payment status: paid, partially paid, or unpaid (terms/due date).
5. Mark it (physically or digitally) with a simple tag if needed: PAID, UNPAID, TO REVIEW.

Categories of Source Documents (What They Prove and What to Capture)

1) Sales Invoices (You billed a customer)

What it proves: You provided goods/services and requested payment. It supports revenue recognition and accounts receivable tracking.

Key fields to capture:

Continue in our app.

You can listen to the audiobook with the screen off, receive a free certificate for this course, and also have access to 5,000 other free online courses.

Or continue reading below...

Download the app

• Invoice date and due date
• Customer name and billing address (if shown)
• Invoice number (unique reference)
• Line items: description, quantity, rate, line total
• Subtotal, tax, total
• Payment terms (e.g., Net 15, Net 30)
• Payment instructions (where/how the customer should pay)

Practical tip: If a customer disputes a charge, the line-item detail and dates are usually what resolves it. Make sure those are legible.

2) Purchase Invoices / Supplier Bills (A vendor billed you)

What it proves: You received goods/services and owe payment (or have agreed to pay). It supports expense tracking and accounts payable.

Key fields to capture:

• Bill date and due date
• Vendor name and invoice number
• Description/line items (what you bought)
• Subtotal, tax, total
• Payment terms (Net 30, due on receipt, etc.)
• Purchase order reference (if your business uses POs)

Step-by-step: When a bill arrives

1. Check that the vendor name and invoice number are present.
2. Verify the date and due date.
3. Scan the line items for reasonableness (matches what you ordered/received).
4. Confirm tax treatment (tax charged vs. tax-exempt).
5. File it as UNPAID until payment is made, then link it to proof of payment.

3) Receipts (You paid at the time of purchase)

What it proves: A purchase was paid immediately (often by card or cash). Receipts are common for small, frequent expenses (fuel, meals, supplies).

Key fields to capture:

• Date/time
• Merchant/vendor
• Items or category detail (especially for mixed purchases)
• Subtotal, tax, tip (if applicable), and total
• Payment method (cash/card; last 4 digits if shown)

Practical tip: Many receipts fade. Capture them quickly (scan/photo) and ensure the date and total are readable.

4) Bank Deposit Slips (You deposited money into the bank)

What it proves: Funds were deposited to your bank account. Deposit slips help you explain what makes up a deposit (especially if it combines multiple customer payments).

Key fields to capture:

• Deposit date
• Bank account (or location/branch identifier)
• Deposit total
• Breakdown: cash amount, check amounts (and check numbers if listed)
• Reference (deposit ID/receipt number if provided)

Step-by-step: Handling a deposit with multiple payments

1. List each customer payment included (checks, cash, transfers).
2. Confirm the sum equals the deposit total.
3. Keep supporting documents together (remittance advice, payment emails, check copies if available).
4. File the deposit slip with the same date as the bank posting (or cross-reference if different).

5) Bank and Credit Card Statements (The bank’s record of activity)

What it proves: Transactions cleared through your bank or card issuer. Statements are essential for verifying completeness and for reconciliation.

Key fields to capture:

• Statement period (start/end dates)
• Account identifier (last digits or account name)
• Opening and closing balances
• Transaction list: posting date, description, amount (debit/credit)
• Fees, interest, adjustments
• Payments and credits (for credit cards)

Practical tip: A statement alone may not show enough detail for categorization (e.g., “SERVICE STATION #123”). Pair it with receipts or invoices whenever possible.

6) Payroll Reports (Proof of wages and withholdings)

What it proves: Employee compensation was calculated and paid, and required withholdings/employer taxes were recorded. Payroll reports support wage expense, liabilities, and compliance.

Key fields to capture:

• Pay period and pay date
• Employee name/ID
• Gross pay (regular, overtime, bonuses)
• Deductions/withholdings (taxes, benefits, retirement)
• Employer taxes/contributions
• Net pay and payment method
• Payroll journal summary (totals by category)

Step-by-step: Filing payroll documentation

1. Save the payroll register (summary) for each pay run.
2. Save proof of payment (bank transaction or payroll provider confirmation).
3. Save tax filing confirmations and payment receipts (if separate).
4. File by pay date and keep payroll in a restricted-access folder (confidential).

Activity: Match the Transaction to the Correct Source Document

Match each transaction to the best primary source document. (Some transactions may have more than one supporting document, but choose the best starting proof.)

Self-check: For each match, identify the core fields (date, party, description, amount, tax, terms) and note which fields are missing and require a second document (e.g., statement line missing item detail → add receipt).

Basic Filing Rules: Make Documents Easy to Find Later

Two simple filing methods (use one consistently)

• Chronological filing: Sort by date (often by month), then by document type (sales invoices, bills, receipts, bank, payroll). Best when you review transactions by period.
• By vendor/customer: Create a folder per vendor and per customer, then file documents in date order inside. Best when you frequently look up history for a specific party.

Practical filing standards (paper or digital)

• Use a consistent naming convention for digital files, such as: YYYY-MM-DD_Vendor_Amount_DocType_Reference.pdf
• Keep related documents together: bill + proof of payment; sales invoice + customer payment confirmation; statement + supporting receipts for unclear lines.
• Separate “paid” vs. “unpaid” for bills and invoices to reduce missed payments and duplicate entries.
• Protect sensitive documents (payroll, bank details) with restricted access.
• Back up digital files and ensure scans are readable (date and total must be clear).

How Document Quality Affects Posting and Reconciliation

Posting accuracy depends on clear details

If the document is missing the vendor/customer, date, or tax, you may post to the wrong period, misclassify the transaction, or record the wrong tax amount. Common quality issues include:

• Illegible receipts (faded ink, blurry photos)
• Missing pages (multi-page invoices without totals or terms)
• Unclear descriptions (statement lines that don’t identify what was purchased)
• No reference numbers (hard to match payments to invoices)

Reconciliation becomes slower when proof is incomplete

During reconciliation, you match your records to bank/credit card statements. If you cannot tie a statement line to a receipt, invoice, deposit slip, or payroll report, you spend time investigating and risk leaving items unmatched. Good document habits reduce:

• Unexplained deposits (solved by deposit slips and payment breakdowns)
• Duplicate expenses (solved by marking bills as paid and linking payment proof)
• Misposted timing (solved by capturing correct dates and due dates)
• Tax errors (solved by keeping documents that show tax separately from totals)

Mini-workflow: From document to ready-to-post packet

1. Collect documents (inbox, email, apps, mail).
2. Verify core fields (date, party, description, amount, tax, terms).
3. Attach supporting proof if needed (receipt + statement line; invoice + payment confirmation).
4. File using your chosen system (chronological or by vendor/customer).
5. Flag exceptions (missing tax, unclear vendor, disputed charge) for follow-up before posting.