In Finance/Accounting you will hear the need for certain documents such as purchase orders, payment vouchers, cash bills, proforma invoice, tax invoice etc . But why the hassle to provide such documents; what is the need for all these paper-work?

Well…. these paperwork serve 1 purpose only. Yeah … just 1 but 1 very important reason & will be used by interested persons. It serve as a PROOF that certain transaction has taken place (as audit trails for future “investigations”).

The interested persons are;

1. people like me (Accountants) – so you can tell the accountant what has taken place & they can then record it into the company’s books. Sometime I think Accountants are like Historian, a custodian of a company’s transactional history or an archeologist (forensic accounting) 🙂
2. IRB – will be inspecting these paperworks with microscope to check the transactions if it is genuine
3. Others like auditors, bankers, customers & suppliers, etc etc

Tomorrow I shall share the widely used documents in business & their purpose as well