Future Business Leaders of America (FBLA) Accounting Practice Test

Which document serves as a proof of transaction for goods or services provided?

1. Memo

2. Receipt

3. Invoice

4. Bank Statement

The correct answer is: Invoice

The invoice is a crucial document in business transactions as it serves as a detailed bill provided by a seller to a buyer. It outlines the goods or services that have been rendered or supplied, including descriptions, quantities, and prices, and it specifies the total amount due. An invoice not only provides proof of transaction but also acts as a formal request for payment. This document is essential for both parties in the transaction: the seller can use the invoice to keep track of sales and receivables, while the buyer maintains a record for accounting and tax purposes. In some accounting systems, invoices are critical for recognizing revenue as they formally establish the terms of the sale and the obligation to pay. Other documents listed, such as memos, receipts, and bank statements, serve different purposes. While a receipt can provide proof of payment already made, it typically follows the issuance of an invoice. Memos may be used for internal communication and are not formal proof of transactions, whereas bank statements provide summaries of banking activity, not specifically detailing goods or services provided. Thus, the invoice is the most accurate answer for proof of transaction for goods or services.