The transactional sales that occur under Double-Entry Account Bookkeeping will always include documentation for those affected by the movement of Kapital and Schuld. Returning to the example established in the preceding Entry, suppose there was a contextual event that prompted the movement of $100 USD between Paula and Dora. What compelled Paula to give Dora $100 USD? Did Dora sell something to Paula whose Value corresponded to that amount?
Imagine for a moment that Paula bought some items from Dora whose Value was $100 USD. Dora allowed Paula to acquire those items from her at that agreed upon Price. While the Accountant and Bookkeeper recording Dora’s finances know the full picture, it becomes inevitable to expect Dora and Paula to receive their own copies of the transactional sale. For Dora, there is a financial document telling her about the $100 USD she will be receiving from Paula. For Paula, there is another document reporting how she gave $100 USD to Dora.
There are two kinds of documents for such a transactional sale, both of which are distinguishable by how and when Dora paid Paula for the items. Those documents are the “Receipt” and “Invoice.”
Everyone reading this Treatise has received a Receipt at one point in their lives whenever they made any purchase of something. The Receipt contains specific information pertaining to the details of the transactional sale. In addition to the date in which the transactional sale occurred, there is contact information on where it took place, including the street address and telephone number. The items being purchased are listed next to the Price for those items and the chosen method of payment. More importantly, if there are any Taxes incurred on the transactional sale, they will also be found on the Receipt as well.
Receipts will always pertain to whoever is doing the purchasing within the transactional sale. Whoever is offering the good or service generates the Receipt for them to keep. As anyone can probably attest, not everyone keeps the Receipts they collect from their transactional sales. It is almost guaranteed that most people throw away the Receipts because they already have the products of the transactional sale and there is little need to return them for refunds. Only when there is a need for a refund does it become necessary to keep the Receipt.
Of course, everything discussed so far was written from the presumption that Dora had $100 USD to spend on items from Paula, and that Paula generated a Receipt for Dora to keep. For the purposes of this Treatise, the idea that Paula would give Dora a Receipt should indicate that a fixed Quantity of Kapital had changed hands from Dora to Paula. However, what happens if Dora, for whatever reason, did not have $100 USD and decides to purchase the aforementioned items from Paula?
Instead of Paula generating a Receipt to provide a document describing how Kapital was transferred as part of their transactional sale, Dora would generate an Invoice for Paula. The Invoice would provide the context, date, address, names, and contact information of Dora, the one who initiated the transactional sale with Paula. Dora would provide an “Invoice Number,” a “Description of the Transactional Sale,” a “List of the Items,” the “Amount Owed,” and the “Invoice Total.” Paula would keep a copy of the Invoice in her records, expecting Dora to eventually pay her $100 USD for the items she had purchased.
Therein lies the key distinction between the Receipts and the Invoices. The former is created as part of a transactional sale involving the movement of Kapital. The latter, meanwhile, pertains to a transactional sale related to the movement of Schuld. Either Dora paid Paula $100.00 USD at the time of the transactional sale or Dora will be paying Paula after the transactional sale.
As far as the Bookkeeper or the Accountant is concerned, whether Dora paid Paula at the time or at some later point are important distinctions to make. The Kapital that Paula got from Dora is Kapital that Paula can in turn spend as part of her own economic activities. But if Dora were to incur any Schuld from her transactional sale with Paula, for the simple fact that Dora does not have $100 ready to spend, then Paula does not have Kapital to spend. What Paula does have is the expectation that Dora will give her Kapital since the burden of the Schuld belongs to Dora.
Whichever the case may be, the movements of Kapital and Schuld are details that need to be recorded in the Daybook Journal. Everything recorded in the Daybook Journal is a draft copy of what will be appearing in the Financial Ledger. The entries recorded in the Daybook Journal by the Bookkeeper will need to be checked and corrected by the Accountant before they can be documented in the Financial Ledger, where the Chart of Accounts (CoA) can be found. This Chart of Accounts (CoAs) will be the focus of the subsequent Entry.
Categories: Work-Standard Accounting Practices
The Fourth Estate 
Leave a comment