Glossary
Invoice
A document a seller sends a credit customer showing what was sold and how much is owed.
What it means
A source document issued by a seller to a buyer, listing goods or services supplied on credit and the amount due.
Example
A supplier sends an invoice for RM3,000 of goods bought on credit.
Why it matters
It is the source document for recording a credit sale or purchase in the day books.
In practice
An invoice is the source document behind credit sales and credit purchases. It is where the entries in the sales and purchases day books start. For the seller, it leads to a debit to the customer and a credit to sales. For the buyer, the same invoice supports a debit to purchases and a credit to the supplier. It usually shows quantities, unit prices, any trade discount, the net amount owed and the payment terms.
For example, an invoice for 10 units at RM30 each, less 10 percent trade discount, shows RM270 as the amount due. RM270 is the figure posted to the ledger.
Students often confuse an invoice with a credit note. An invoice increases the amount a customer owes and records the sale. A credit note works the other way. It reduces what the customer owes when goods are returned or an overcharge is corrected.
If you find the source documents and day books hard to keep apart, one of our teachers can go through a full set with you. Book a trial class.
Related terms
Syllabus reference: Cambridge 0452 and 0985, syllabus for 2027 to 2029, sub-topic 2.2 Business documents (page 12).
Definitions here are general accounting explanations for study. For your board's exact wording, see its official syllabus via Sources.
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