Mode of Accounting

Accounting process begins with identifying and recording the transactions in the books of
accounts i.e., the first step in the Accounting Process is recording of transactions in the books of
accounts. Accounting identifies only those transactions and events which involves money and is
sorted based on various source documents.

The following are the most common source documents.

• ‡ Cash Memo
• ‡ Invoice or Bill
• ‡ Vouchers
• ‡ Receipt
•  Journals & Ledgers
• ‡ Debit Note
• ‡ Credit Note

Voucher
A voucher is a document in support of a business transaction, containing the details of such transaction.

Receipt
When a trader receives cash from a customer against goods sold by him, issues a receipt containing the name of such customer, details of amount received with date.

Invoice or Bill
When a trader sells goods to a buyer, he prepares a sales invoice containing the details of name
and address of buyer, name of goods, amount and terms of payments and so on. Similarly, when
the trader purchases goods on credit receives a Invoice/bill from the supplier of such goods.

Journals and Ledgers
A journalis a record in which all business transactions are entered in a chronological order. A
record of a single business transaction is called a journal entry. Every journal entry is supported
by a voucher, evidencing the related transaction.