Introduction
Each time a company has a business transaction, some sort of paper trail is generated. That paper trail is a source document. For example, if a business writes a check from its checking account for office supplies, the source document is the check.
The source document should be recorded in the appropriate accounting journal as soon as possible after the transaction. After recording, all source documents should be filed away in some sort of system where they can be retrieved if and when they are needed.
If a company is audited a formal examination of an organization's accounts or financial situation , source documents back up the information recorded in the accounting journal. An audit is a formal examination of an organization’s accounts or financial situation.
Following successful completion of this lesson, students will be able to...
- Recall and use the steps of the accounting cycle for services and merchandising businesses using manual and electronic methods.
Essential Questions
- What is a source document?
Enduring Understandings
- Rules of debits and credits are used to analyze business transactions.
- Source documents are analyzed to determine the effects on accounts.
The above objectives correspond with the Alabama Course of Study: Accounting standards: 4.