AI Tutor
Before an accountant writes a single number into a ledger, they need undeniable proof that money actually changed hands or was promised.
A source document is the original physical or electronic record that proves a business transaction occurred and provides the raw data needed for bookkeeping.
Every source document has a specific role, but what document tracks goods delivered before the customer has paid a single cent?

Invoices: The Foundation of Credit Sales

An invoice is a formal commercial bill issued by a seller to a buyer demanding payment for goods or services supplied on credit (meaning payment is due later).
The exact same piece of paper is a sales invoice to the seller recording income, but a purchase invoice to the buyer recording an expense or inventory addition.
Let's trace a concrete invoice: Apex Supplies sells 10 desks at $100 each to Nova Corp with a 10% trade discount (an immediate price reduction agreed between businesses) and 5% sales tax.
The list price is 1,000,lessthe1,000, less the 100 trade discount to get a net price of 900,plus900, plus 45 tax (5% of 900),producingagrosstotalpayableof900), producing a gross total payable of 945.
A common mistake is recording trade discounts in a separate ledger account. Trade discounts are deducted directly on the invoice face — only the net figure ($900) enters the accounting books.
What happens if Nova Corp opens the delivery crates and finds two of those desks are badly damaged?

Credit Notes: Correcting the Balance