To trace a transaction, follow it from the source document to the book of original entry and then to the ledger accounts, and note a reference at each step. If you can make that chain for every entry, you can also walk it backwards to find a mistake.
This lesson closes the core teaching in source evidence and original entry. It pulls together all four earlier lessons, starting with choosing the source document.
What is the chain you are following?
Each transaction passes through the same stages. The double-entry and ledger trainer shows the final stage on screen.
- Source document: the evidence, with its number.
- Book of original entry: the first written record, with a page or line reference.
- Ledger account: the debit and the credit, each noting where it came from.
If any stage is missing or the amount changes between stages, that is where to look.
How do you build a trace?
- List the documents with number, issuer and net amount.
- Name the book each one goes into.
- Write the debit and credit that will be posted from each.
- Post and reference each entry in the ledger.
- Check the balances against the documents and confirm total debits equal total credits.
Worked example
Aina Stationery has four documents in March.
| Document | Details | Net (RM) | Book | Debit | Credit |
|---|---|---|---|---|---|
| Invoice 2041 (from Bintang) | 40 reams at 12, less 10% | 432 | Purchases day book | Purchases | Bintang |
| Credit note 305 (from Bintang) | 5 reams at 12, less 10% | 54 | Purchases returns book | Bintang | Purchases returns |
| Invoice S-09 (to Wira) | 12 boxes at 20 | 240 | Sales day book | Wira | Sales |
| Credit note S-02 (to Wira) | 3 boxes at 20 | 60 | Sales returns book | Sales returns | Wira |
Ledger accounts (only these four documents):
| Account | Debit (RM) | Credit (RM) | Balance (RM) |
|---|---|---|---|
| Purchases | 432 | 432 Dr | |
| Purchases returns | 54 | 54 Cr | |
| Sales | 240 | 240 Cr | |
| Sales returns | 60 | 60 Dr | |
| Bintang (payable) | 54 | 432 | 378 Cr |
| Wira (receivable) | 240 | 60 | 180 Dr |
Check: Debit balances: 432 + 60 + 180 = 672. Credit balances: 54 + 240 + 378 = 672. They agree.
Each line also agrees with its document. 432 − 54 = 378 is what Aina still owes Bintang. 240 − 60 = 180 is what Wira still owes Aina.
The mistake to watch for
A common slip is to post the right amount to the right account but on the wrong side, and then not know where to look.
Mistaken posting: Credit note 305 is posted as a debit of RM54 in purchases returns, while Bintang is debited correctly.
Debits become 672 + 54 = 726 and credits become 672 − 54 = 618, a difference of 108.
The difference of RM108 is twice the error, because the same amount sits on the wrong side. That is a clue.
To trace it, pick the entry worth RM54, check the credit note, then the returns book, then the ledger side. You will find the flipped side at the third step.
The correction is to credit purchases returns RM54. Debits and credits return to 672 each.
Check yourself
Try these, then open each answer.
1. Trace a credit purchase of RM200 from invoice 514. Name the book and the two accounts.
Show answer
Invoice 514 goes in the purchases day book. Debit purchases RM200, credit the supplier’s account RM200.
2. A supplier’s ledger account shows a credit of RM300 for invoice 88, but the invoice itself says RM350. Which step do you check first?
Show answer
Check the day book line against the invoice. If the day book shows RM350, the error is in posting. If it shows RM300, the error is in copying from the invoice.
3. Only these four entries exist: credit purchase RM250, purchases return RM30, credit sale RM400, sales return RM50. Do the debit and credit balances agree?
Show answer
Debits: purchases 250, sales returns 50, receivable 400 − 50 = 350, total 650. Credits: purchases returns 30, sales 400, payable 250 − 30 = 220, total 650. They agree.
Where this leads next
Test the whole topic with the source evidence practice set. Then the ledger ideas continue in double-entry foundations.
If you can trace in class but lose the thread in longer questions, a teacher in online one-to-one Accounting tuition can practise the chain with your own questions.