What are source documents and why are they important?

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When a business generates a financial transaction, it creates a paper trail. This paper trail is called a “Source Document.” Your bookkeeper or accountant may ask you to provide them with some sort of source document to verify data and record transactions correctly. A good source document should describe the basic facts of the transaction such as the date, the amount, the purpose, and all parties involved in the transaction. 

Some examples of source documents include:

  • Bank Statements
  • Payroll Reports
  • Invoices
  • Leases & Contracts
  • Check Registers
  • Purchase Orders
  • Deposit Slips – not included on a bank statement
  • Check Copies – not included on a bank statement
  • Evidence of a Sale or Disposal of an Asset
  • Credit Card Statements
  • Amortization Schedules
  • Sales Tax Returns

The source document is a good internal control and provides evidence a transaction occurred. Providing source documents to your bookkeeper or accountant in a timely manner assists them in preparation of financial statements and accurately analyzing your business activity. 



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