INVOICE VS RECEIPT —SIMILARITIES AND DIFFERENCES

A receipt is an official business document that certifies that a specific amount of money has been received by a company.

It is a source document that is issued to acknowledge receipt of a specific amount of cash or a check from a client.

An invoice, on the other hand, is a business document indicating that a buyer must make a payment to the seller in accordance with the agreed-upon terms and conditions

An invoice can also be defined as a business document issued by a supplier to a buyer indicating that a payment is due.

Similarities Between an Invoice and a receipt

1. Both are source documents: Both invoice and receipt are source documents.

Source documents are business documents that contain the details of business transactions.

2. The seller may issue both: The seller typically issues the invoice and the receipt.

The distinction is that whilst an invoice is intended to inform the consumer that payment is required, a receipt is used to inform the buyer that payment has already been made.

3. Both contain information about the buyer and the seller: Both the receipt and the invoice include details about the buyer and the seller as well as the amount that is due/amount that has already been paid.

4. Both are part of the purchasing cycle: Both receipt and invoice are part of the purchasing cycle.

This is because an invoice is issued to demand payment and a receipt is given after the payment has been made.

5. They are pre-numbered: Both receipt and invoice are usually pre-numbered in the sense that they have numbers on them before being issued.

The purpose of the invoice number/receipt number is to help the business accurately record its income for accounting purposes.

Differences between invoice and receipt

1. Invoice is a payment request, whereas receipt is proof of payment.

2. A receipt is only issued after payments have been made, whereas an invoice is issued before payment.

3. While a receipt shows the total amount paid, an invoice shows the total amount still owed.

4. Receipts serve as source documents for cash journals or cash books.

Invoice, on the other hand, can serve as the source document for a purchases journal and a sales journal.

A purchase or incoming invoice serves as the source document for the purchases journal while a sales or outgoing invoice serves as the source document for the sales journal.

5. A receipt specific to the date on which cash or check payment was received, whereas an invoice typically specifies a due date before which payment should be made.

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Tabular Comparisons of Income and Receipt

Features    Invoice Receipt
Is it a source document?YesYes
Issued by the sellerYesYes
Issued

To Request paymentas proof of payment
Part of the purchasing cycleYesYes
Source document ForSales journal and purchases journalCashbook or cash journal
Pre-numberedYesYes
Period of issueBefore paymentAfter payment
Showsamount dueamount paid

To conclude, the major similarities between Invoice and receipt are that both are source documents and are usually pre-numbered.

The difference between invoice and receipt is this: invoice is used to request payment while the receipt is used to evidence payment.

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