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22 10 2007

What Is The Importance Of Source Document?

Posted by: slang in c. Source Documents
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A source documnet is a WRITTEN document that provides details of a transaction and the evidence that the transaction has taken place. All accounting entries are based on information derived from the source documents. The importance of source documents cannot be neglected by the bookkeeper otherwise this may spelt trouble. Tabulate below the importance of source document and its implication in the event source documents are been neglected:-

Importance Of Source Document

  • Source document provide evidence or proof that a transaction has occurred.
  • They are used as part of a process to record information into the books of original entry.
  • They are required for audit purposes

Salient Point:

When any fraud occurs,source documents are always been examined to either rebuke or confirm whether such fraud occurs

for example

  • double payments using the same INVOICE,
  • payments without any actual bills supporting such transaction.

The use of source documents satisfies the accounting principle of OBJECTIVITY.All data regarding any transaction that is recorded in the books of the business must be verifiable through source documents.

In view of the foregoing,when a bookkeeper starts to neglect the proper filing and maintaining of source documents eg sales invoices,suppliers invoices,etc and also as and when any of the source document is required by internal or external party but the bookkeeper is unable to produce such source document, it can instil bad feeling of “fraud” or lack of internal control.

This entry was posted on Monday, October 22nd, 2007 at 11:45 pm and is filed under c. Source Documents. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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