Final answer:
A credit note is a source document that would be recorded in an entity's cloud-based accounting software because it reflects adjustments to accounts due to returns or corrections.
Step-by-step explanation:
The question asks about which document would be recorded in an entity's cloud-based accounting software. Among the options provided, a credit note is a source document that typically would be recorded. A credit note is issued by a seller to the buyer, indicating the reduction of the amount owed by the buyer to the seller, usually due to returned goods or a correction of an overcharge. This document would be entered into the accounting software to adjust accounts receivable and reflect the transactions accurately.
In contrast, a debit note could be an internal document or issued to a supplier when goods are returned, reflecting an increase in the amount owed to the entity. A sales order represents a customer's intention to buy products or services and precedes an invoice, while a purchase order is an order placed by the business to acquire goods or services from a supplier, but neither of these would typically result in immediate accounting entries until the transaction is fulfilled or invoiced.