Source documents are original records that show that a transaction has taken place. They are used as the foundation for recording transactions in journals and ledgers. Source documents help confirm that transactions actually happened and make farm records accurate, reliable, and verifiable. Proper use of source documents ensures transparency and accountability in farm bookkeeping.

In agricultural bookkeeping, the common types of source documents include:

1. Sales Invoice
   
   Issued when farm produce is sold.
   
   Shows details of items sold, quantity, price per unit, total cost, and the buyer’s information.
   
   Used to record sales in the sales journal.


2. Purchase Invoice
   
   Received when the farm buys goods or services from a supplier.
   
   Shows details of items purchased, quantity, price, total cost, and supplier’s information.
   
   Used to record purchases in the purchases journal or accounts payable.


3. Receipt
   
   A proof of cash received, for example, from customers or other sources.
   
   Used to record cash inflows in the cash book or receipts journal.


4. Voucher
   
   A document prepared to support payments made, such as payments for wages, utilities, or purchases.
   
   Provides information on the purpose and amount of payment.


5. Credit Note
   
   Issued by a supplier or seller to reduce the amount a buyer owes.
   
   Used when goods are returned or when there was an overcharge.


6. Debit Note
   
   Issued to increase the amount a buyer owes.
   
   Used when the buyer was undercharged or additional payment is required.

After a source document is issued or received, it is used to record transactions in journals, which are the first step in the bookkeeping process.

1. Sales Invoice → Sales Journal


2. Purchase Invoice → Purchase Journal


3. Receipts or Vouchers → Cash Book or Payments Journal

After recording in journals, transactions are posted to ledgers, which summarize all transactions in specific accounts, such as Sales Account, Purchases Account, or Cash Account. These ledger balances are then used to prepare farm financial statements.

1. Purchase Invoice
   

   Fertilizer Supply Ltd
   Purchase Invoice No: PI001
   Date: 10/11/2025

   Description	Quantity	Unit Price (₦)	Total (₦)
   NPK Fertilizer 50kg	10 bags	1,000	10,000

   Supplier: Agro Farm Supplies
   Payment Terms: Credit – 30 days
   Prepared By: John Doe
   Narrative: Purchased 10 bags of NPK fertilizer on credit for farm use.



2. Sales Invoice
   

   Green Farms Ltd
   Sales Invoice No: SI002
   Date: 12/11/2025

   Customer Name	Description of Goods	Quantity	Unit Price (₦)	Total (₦)
   Mr. Adebayo	Maize (bag 50kg)	5 bags	5,000	25,000

   Payment Terms: Credit – 14 days
   Prepared By: Jane Okoro
   Narrative: Sold 5 bags of maize on credit to Mr. Adebayo.



3. Receipt
   

   Green Farms Ltd
   Receipt No: R001
   Date: 15/11/2025

   Received From	Amount Paid (₦)	Purpose
   Mr. Adebayo	25,000	Payment for maize sold on credit

   Prepared By: Jane Okoro
   Narrative: Received payment for 5 bags of maize sold to Mr. Adebayo.



4. Credit Note
   

   Green Farms Ltd
   Credit Note No: CN001
   Date: 18/11/2025

   Customer Name	Description	Amount (₦)
   Mr. Adebayo	Maize returned due to poor quality	5,000

   Narrative: Credit issued to Mr. Adebayo for returned maize.



5. Return Outward Note
   

   Agro Supplies Ltd
   Return Outward Note No: RON001
   Date: 20/11/2025

   Supplier Name	Description	Quantity	Amount (₦)
   Agro Supplies Ltd	Defective fertilizer	2 bags	2,000

   Narrative: Returned 2 bags of defective fertilizer to the supplier.



6. Delivery Note
   

   Green Farms Ltd
   Delivery Note No: DN001
   Date: 22/11/2025

   Customer Name	Description	Quantity
   Mr. Adeola	Eggs (tray)	10 trays

1. They provide evidence that transactions actually happened.


2. They prevent errors in recording transactions.


3. They help organize farm records systematically.


4. They provide information for auditing and verification.


5. They help farmers manage resources and make informed decisions.

Summary

• Source documents are essential for proof of all farm transactions.


• They form the foundation for recording in journals and ledgers.


• They prevent errors and help organize farm records.


• They improve transparency and accountability in farm management.


• Proper use of source documents helps farmers plan, track resources, and make informed decisions.