Sales invoices and credit notes are source documents for recording the details of the transactions in the accounting records of the business.
For a sales invoice, the coding should be enough to ensure that:
In a manual system, this will normally require several codes.
For the general ledger record, the code number for the sales account and for the sales tax account, along with the receivables account code number.
To record the amount owed by the individual receivable the customer's account code. This might be referred to as the customer's receivables ledger account number.
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The coding required for a credit note should be sufficient to identify the transaction as a sales return or retum from a customer, for recording in the general ledger. In addition, a record should be made of the fact that the debt of the individual customer has now been reduced.
In a manual accounting system, this will normally require several codes:
For the general ledger account code numbers for the sales returns account, the sales tax account and the receivables ledger account.
To record the reduction in the amount owed by the individual customer, the customer's account code in the receivables ledger.
There are a variety of methods of coding invoices and credit notes. One commonly used method is to use a stamp to put a grid or table on the document, and then fill it in with the code details.
The grid box can go under a variety of names, but essentially it is a box stamped on to the internal copy of an invoice (or credit note) before the invoice details (or credit note details) are entered in the accounting system.
The box is filled in both to make a note of the appropriate account code numbers, and as a checklist to make sure that the appropriate procedures for entering the transaction in the accounting system have been carried out.
Even when an invoice is produced by a computerised integrated accounting system, some checks will still be required to ensure that, for example the correct prices have been charged or that the correct individual receivables ledger account has been updated.
The typical contents of a grid box are as follows:
| General ledger account names and codes | |
| Debit | Receivables 5003 |
| Credit | Sales 6002 |
| Additions and calculations checked | ✓ |
| Credit note authorisation obtained | Not applicable |
| Receivables ledger account | S42770 |
| Initial when posted | RGT |
Here, the general ledger account codes of 5003 and 6002 may be the for the accounts in the general ledger for domestic sales and receivables, and the receivables ledger account number will be the customer account number for the customer to whom the invoice was sent.
When the invoice has been correctly recorded in the accounting system, the final grid box is initialled. It therefore acts as a safeguard to make sure that the transaction is not omitted or duplicated in the accounting system. The copy of the invoice or credit note is then filed.