Definition: A receipt is a document that states the details of a given financial transaction. It describes all the relevant elements of the operation.
Receipts are issued in many different scenarios to have a written record of what has happened. The most common receipts are sales receipts. These documents state a detailed description of the sale, they contain some elements like the date of the transaction, the price of each item and the total cost; the amount paid or owed (depending if the receipt was paid at the time or if it was a transaction that will be paid in the future), it states which items were sold and the quantity of each and the name of the company and the client, among other details.
The purposes of these receipts are many. First of all they serve as accounting records. Also, they give the customer a written proof of the transaction in case they have a claim in regard to the items being bought. Receipts can also be issued to record that something was transferred, as in the case of a barter transaction. Finally, receipts can also be issued when a company hands off some money that has to be reimbursed or justified later on, as in the case of travel expenses that must be reported by the employee after the trip has ended.
Here’s an illustration of a situation where a receipt is issued,
Mrs. Molly lives in a neighborhood in downtown Miami. Today she went to a local supermarket to buy some groceries and after picking everything she needed she went to the cashier to pay for everything. The supermarket needs to record Mrs. Molly transaction (the purchase) in order to know how much and what they are actually selling.
They do this through a digital administrative system that issues a receipt to each customer with the details of what they have purchased and the total amount of the operation. This receipt allows the company to keep a record of each sale for the accounting department and they are also useful for the clients for tax purposes or budget tracking.
Accounting & CPA Exam Expert
Shaun Conrad is a Certified Public Accountant and CPA exam expert with a passion for teaching. After almost a decade of experience in public accounting, he created MyAccountingCourse.com to help people learn accounting & finance, pass the CPA exam, and start their career.