What is a source document?

During the audit opening meeting we were informed that all the source data is on paper and no electronic documentation is used. The site was actually using MS word to document the data collected during the study. In normal practice the site did not use MS word to generate medical records. For the trial subjects there were no other hand-written progress notes which the site would normally use for routine patients.

This is a form sent to Acme setting out the 5,000 CDs to be supplied and the price to be paid (already agreed between the companies). A source document is the location where a document or a portion of another document was retrieved. For example, when using an optical scanner, the document being scanned is considered the source document. Upgrading to a paid membership gives you access to our extensive collection of plug-and-play Templates designed to power your performance—as well as CFI’s full course catalog and accredited Certification Programs. CFI is the official provider of the Financial Modeling and Valuation Analyst (FMVA)™ certification program, designed to transform anyone into a world-class financial analyst.

  • It doesn’t have to be a paper document, as electronic records are acceptable.
  • A statement or statement of account is an itemized report showing the amount owed by one business to another, as well as details of transactions between the two businesses.
  • It may also be prudent to retain these documents irrespective of regulations, if only to provide evidence in the event of a lawsuit, or to provide better customer service.
  • Third, Acme sends an invoice to Maiden for the agreed price of the 5,000 CDs.
  • If the fax is not working it may result in not receiving important data i.e., lab reports, data queries, investigational product allocation confirmations, SAE transmission confirmations, etc.

Initially, it requests a product or a service, but it is a binding agreement once the seller accepts the purchase order. When
a company sells any product or service to another party, it issues an invoice
or a bill. The invoice shows the description of the product, the parties
involved in the transaction, the date, the quantity and the price.

What is a Source Document?

You should always keep receipts, bank statements, invoices, payroll records, and any other documentary evidence that supports an item of income, deduction, or credit shown on your tax return for at least six years. The type of source document you should retain varies with the type of transaction you need to substantiate. Just as there are different source documents for personal finances and business, there are specific source documents for accounting. These documents prove not only that a transaction took place but also that a business rendered goods or services.

  • Regardless of the situation, not having source documents will make reconciliation more complicated and can hurt client relations.
  • This document gives the buyer’s accounting department an objective and reliable record of the purchase transaction.
  • Also, the credit note can be sent from the buyer to the seller, in response to receiving a debit note, to acknowledge a seller’s claim.

The credit note can be sent by the seller when the buyer has returned the product to the seller, fully or partially. In this case, the credit note indicates that the buyer does not need to pay for these products if purchased on credit, or that the seller now owes the buyer a refund, if the buyer already paid for the products. Also, the credit note can be sent from the buyer to the seller, in response to receiving a debit note, to acknowledge a seller’s claim. A receipt is a financial source document that provides proof that cash was transferred from one party to the other. They are the primary source documents for sales and similar forms of income. Welcome to the lesson on source documents in accounting, where we’ll learn what these are, why they’re important and where we’ll look at some common examples.

The final category of source documents used to create accounting records consists of banking documents. Various regulations mandate that some source documents be retained for a number of years. It may also be prudent to retain these documents irrespective of regulations, if only to provide evidence in the event of a lawsuit, or to provide better customer service.

Receipts (Cash or Credit)

As such, these worksheets are no longer a primary source and thus no source document. A source document refers to any original record which contains the details of and serves as proof or record of a transaction that has either been entered or will be entered in the accounting system. When formal methods of accounting were not introduced, source documents were found in handwritten notes. At present, you can see a combination of printed and electronic source documents. You would keep source documents for your business just like you keep receipts for tax-deductible items for your taxes.


Part of their audit involves reviewing the details of various transactions, which are originally shown in the source documents. The source documents serve as proof of amounts accurately recorded in later steps of the accounting cycle, from the accounting journals and ledger to the final financial reports. Any information generated through source documents should be properly recorded in either the company’s journal, accounting software, or financial books.

In this case, the seller notifies the buyer that in
their accounts they have increased the amount what the buyer owes to the seller. Formally, it can serve as a request for extra payment from the buyer, e.g. when
there were changes to the original invoice. The debit note can be sent from the buyer to the seller together with returned goods. In this case, the buyer notifies the seller that they do not intend to pay for the goods if purchased on credit, or they expect a refund or credit from the seller if goods have already been paid for.

After the initial recording, all documents should be preserved and organized into a file and put into a system so they can be retrieved at any time. It is also important to make a record of general internal control procedures specifying who in the firm can access and authorize payments, orders, and other transactions. Once the customer pays the bill, the seller issues a receipt that details the order and payment terms. This source document is proof that the seller fulfilled the order and the client paid the balance. Receipts should be matched to checking and credit card statements and the petty cash log.

For most retail businesses, however, the source document that accountants will work from is the till roll. This shows the total amount taken in for goods and services, whether by cash, check, or card. On a practical level, the original invoices and credit notes are of course sent to the customer. You may be working from a copy, or in some cases simply from a computer listing transactions within the accounting system. A supplier invoice is a source document that supports the issuance of a cash, check, or electronic payment to a supplier. A supplier invoice also supports the recordation of an expense, inventory item, or fixed asset.

Accounting for Dependent Branches

Bookkeepers and other accounts personnel are adamant that a business keeps records of everything. Just as the name suggests, it is a document that serves as the proof or source of the transaction. However, when you are studying potential research bias in scientific journalism, the same article could be used as a primary source, because it provides direct evidence on your topic. Consult your institution’s library to find out what newspaper archives they provide access to. They’re typically written by experts and provide an extensive overview and analysis of a specific topic. They can be written by a single author or by multiple authors contributing individual chapters (often overseen by a general editor).

Payment confirmations are documents serving as proof that payment has been made by electronic transfer (payments made through the internet, using a cellphone, computer or other electronic means). Instead they have separate pages at the back of the checkbook (behind all the checks) where you can hand-write the details of checks you have issued, including the check number, the value and who/what they were for. A check (or cheque) is a common form of payment, instructing a bank to transfer money from one bank account to another. In addition, invoices often indicate when the payment is to be made, the business banking details, etc.

Do you own a business?

It records the accountability of the investigational product dispensed, consumed and returned by the subject. It serves as the complete medical record of the subject as the reference to cpa vs accountant the treating physician at any point of time. A receiving report is issued and all three of these documents are sent to the accounting department to approve the invoice from the vendor.

These types of sources usually don’t include a bibliography and are written for a popular, rather than academic, audience. They are not always reliable and may be written from a biased or uninformed perspective, but they can still be cited in some contexts. The articles and research support materials available on this site are educational and are not intended to be investment or tax advice. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. The supplier should have a completed paying-in slip stub/counterfoil in the paying-in book, showing the payment of the check into the bank.

At Pridgeon & Zoss, we advocate for both individuals and businesses in their dealings with the Internal Revenue Service (IRS) and the Minnesota Department of Revenue (MDR). We often rely on source documents to prove our clients’ case to the tax authorities. If you are facing an audit or are embroiled in a tax dispute, reach out to our law office today. This reluctance to collect source documents usually occurs for a couple of reasons. First, many accounting and bookkeeping professionals believe that it is the small business’s own responsibility to keep track of their documents. Second, managing source documents – especially keeping track of paper – can be a huge pain.

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