Receipt

Receipt

A receipt is a written or electronic acknowledgment that something of value has been transferred from one party to another. It serves as proof that a payment, sale, or transfer took place and is used by consumers, businesses, banks, and financial markets to document transactions.

Key takeaways

• Receipts document financial transactions and serve as proof of payment.
• They are used for tracking cash flows, returns, warranties, and tax reporting.
• The IRS accepts scanned and digital receipts if they are accurate and retrievable.
• “Gross receipts” refers to total cash or property received before deductions.

What a receipt typically includes

• Date and time of the transaction
• Name and contact of the vendor or service provider
• Description of goods or services provided
• Quantity and unit price (if applicable)
• Total amount paid and method of payment (cash, credit card, check, etc.)
• Taxes, fees, discounts, or adjustments
• Transaction or invoice number and, sometimes, a signature

Uses and importance

• Accounting and bookkeeping: receipts substantiate entries in income statements and balance sheets.
• Tax compliance: receipts support deductions and document business or deductible personal expenses.
• Returns and warranties: many retailers require a receipt for exchanges, refunds, or warranty claims.
• Reimbursements: employers and organizations use receipts to verify and reimburse expenses.

IRS recordkeeping guidance

• Retention: individuals should generally keep records for at least three years after filing, though certain situations (unreported income, bad-debt deductions) can justify keeping records for six or seven years.
• Accepted formats: digital and scanned receipts are valid if they are accurate, preserved, and can be reproduced on request. Businesses must be able to retrieve and supply copies to tax authorities.

Types of receipts

• Cash register tapes and point-of-sale receipts
• Printed or emailed invoices (once paid, an invoice becomes proof of payment)
• Credit card statements and merchant receipts
• Packing slips (document shipment contents)
• Petty cash slips and reimbursement vouchers

Invoice vs. receipt

• Invoice: a request for payment issued before or after goods/services are provided; it indicates an amount due.
• Receipt: issued after payment to confirm funds were received. An invoice becomes a receipt only after payment has been made and recorded.

Gross receipts

Gross receipts are the total amounts received by a business from sales and other sources before any deductions (returns, allowances, costs). They are used as an input when calculating net income and assessing overall revenue.

Origin and history

Recordkeeping for transactions dates back to ancient economies, where receipts were used to document exchanges and taxes. Over time, printing technology and later digital systems standardized and simplified receipt creation and storage.

Bottom line

Receipts are a fundamental element of financial documentation. They provide proof of transactions, support accounting and tax reporting, and protect both buyers and sellers in disputes, returns, and warranty claims. Proper collection and retention—physical or digital—help ensure compliance and accurate recordkeeping.