Source document

Definition

A source document is an original record containing the details of a business transaction. It provides the evidence needed to record a financial transaction in an accounting system.

5 Must Know Facts For Your Next Test

1. Source documents include invoices, receipts, bank statements, and purchase orders.
2. They are critical for audit trails, ensuring that transactions can be verified.
3. Source documents serve as the primary input for recording entries in journals and ledgers.
4. The accuracy and completeness of source documents directly impact the reliability of financial reports.
5. Electronic versions of source documents are increasingly common due to advancements in technology.

Review Questions

Related terms

invoice: A commercial document issued by a seller to a buyer, detailing goods or services provided and their costs.

receipt: A written acknowledgment that something of value has been transferred from one party to another.

journal entry: An accounting record where transactions are initially recorded before being posted to ledger accounts.