What is a source Document?
A source document is the very first document that records the initial details of a transaction. In other words, the original document to record the transaction before it is entered anywhere else is called the source document.
Why is it called the source document?
Simply because it is the first document and any transaction traces back it source to this document. If anyone wants to verify the authenticity of a transaction, the best way is to go back to the first document (source document).
What are the examples of Source Documents?
These may include, among other, the following:
- Time sheet for employees
- Invoices sent
- Invoices received
- Cash receipts
- Check issued
- Cancelled checks
- Deposits slips
What information does a source document bear?
It depends on the format an organization may devise for the document. They may include as much informationas one wants. Most commonly, it consists the following:
- Date of transaction
- Amount of transaction
- Description of transaction
Some source documents such as invoices to customers or from suppliers may also record name, address or contact information. The date, amount and description are the minimum information that should be recorded on such a document. As mentioned above the source document is the earliest document in the accounting cycle. Once the information from the document is journalised, it is filed and may be retrieved as and when required. It can be either paper based or electronic. In most modern accounting systems the source documents are generated electronically by putting input data into forms. The auditors normally verify all the transactions from the original sources i.e. the source documents.
What happens if a source document is missing?
A business is required to keep all its information as safe as possible. If a document is generated electronically, there are less chances that it will be missing. However, in case of manual or paper based receipts, there are chances that these may be either misplaced or can be lost. If such a document is lost, another should be generated as soon as possible with proper authorisation. These should also be stamped or marked as duplicate to show that the original was lost.