Receipt

What Is a Receipt?

In finance and accounting, a receipt is a document or record that confirms a payment has been made or received. It serves as evidence that a transaction took place, showing what was paid, who paid it, when, and for what. Receipts can be paper, electronic, or stored in accounting software. Businesses use them to track money coming in and going out, and individuals keep them to support expenses and purchases.

How Receipts Work

When a buyer pays a seller, the seller typically issues a receipt listing the date, the amount, the items or services covered, and the payment method. The buyer keeps a copy as proof. In business accounting, receipts are the source documents behind entries in the general ledger. Cash received from customers and cash paid to suppliers are both recorded from receipts, and these records are compared against each bank statement during reconciliation to confirm that the books match actual bank activity.

Receipts often close out a bill. An invoice is a request for payment, and once it is settled, a receipt confirms that. Companies track amounts still owed to them through accounts receivable and amounts they owe to others through accounts payable.

Receipts in Investing

In investing, the word has a more specialized meaning. A depositary receipt is a certificate issued by a bank that represents shares of a foreign company, which can then trade on a local exchange. An American Depositary Receipt (ADR) is one common example, allowing U.S. investors to buy shares of non-U.S. companies in dollars. Here the receipt is a security in its own right, rather than proof of payment.

Why It Matters

Keeping receipts supports accurate bookkeeping, helps with tax reporting, and provides documentation if a payment is disputed. For investors, understanding depositary receipts clarifies what they actually hold: a claim on shares kept by a depositary bank, which may differ in some respects from owning the underlying shares directly.