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. In considering all the elements that are essential for business compliance, the successful management of source documents is at the top of the list. You should document your compliance with internal requirements closely with company records.

He has a CPA license in the Philippines and a BS in Accountancy graduate at Silliman University. If you reimburse your employees’ expenses, retain any applicable receipts for your records. In addition, to avoid treating the payments to your employees as income, the employee should document the date and purpose of the expense, and the employer must reimburse the exact amount. A packing slip describes the items shipped to a customer, and so supports the recordation of a sale transaction. A cash register tape can be used as evidence of cash sales, which supports the recordation of a sale transaction. A failure in the system at this point would mean that an unscrupulous trader could simply issue invoices for non-existent goods or services to businesses taken from a trade telephone directory and get paid.

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Effective management of vouchers involves implementing a systematic process for voucher creation, review, approval, and recording. By maintaining well-documented vouchers, businesses can ensure compliance, accuracy, and transparency in their financial transactions and reporting. They serve as the primary evidence of financial transactions and play a crucial role in maintaining the accuracy and integrity of accounting records.

• When you have already paid for items, a credit note is offered to enable money to be taken off your next purchase.
• Proper retention and storage of source documents are essential for maintaining the integrity of financial records.
• Likewise, every company must have a procedure about the source document
  destruction policy.
• Ideally, you’ll also keep a record of internal control procedures that specifies who in your company can access and authorize payments, orders, and other transactions.
• These different sponsors/CROs communicate different level of expectations regarding source documentation.

It’s important to reconcile your credit card statement to ensure that you haven’t missed any fraudulent charges, and it can serve as evidence that a particular purchase was made. They may represent a bill for ongoing services or can be based on purchase orders for specific items and services. Keeping a copy of each vendor invoice ensures that you have a record of your expenses and can also keep track of upcoming due dates. A packing slip is an internal document that includes a complete list of items included in a package. If you’re shipping a product to a customer, saving the packing slip enables you to prove that the purchase took place and was fulfilled.

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This can be as simple as scanning a receipt or invoice or even taking a picture of a purchase order for your records. It is crucial for businesses to establish and maintain thorough documentation of contracts and agreements. They should be properly reviewed, signed, and securely stored, ensuring compliance, accurate financial reporting, and mitigating potential risks or disputes that may arise during the course of the business relationship. This means that the basis of every ledger and journal entry must be a document certifying a business transaction, and the document must meet the requirements of legislation. Apart from the documents given above, there are other documents also which serve as evidence for recording transactions like the point of sales summary, salary slip, bank statements, utility bills, etc.

Examples of Source document in a Sentence

Similarly, the Canadian Revenue Agency (CRA) accepts scanned documents as long as the records are produced and retained in paper format or stored in an electronically accessible and readable format. Source documents are used to record transactions because they are original and show an objective report of the economic activities of each transaction. For example, when a company purchases goods from a vendor, the vendor creates a receipt or invoice that shows the goods that were purchases, the purchase price, date of transaction, seller’s name, and the method of payment. This document gives the buyer’s accounting department an objective and reliable record of the purchase transaction.

Source Documents or Source Vouchers

These documents serve as proof and can be attached to invoices that are sent to the client. A credit card statement is a summary of how you used your credit card during a billing period. The summary includes your payments, credits, purchases, cash advances, balance transfers, fees, interest charges, and amounts past due. Your bank account statement is an essential document because it helps you compare the bank’s records with your own. By reconciling your account statement each month, you’ll be able to identify and resolve any discrepancies and ensure that your accounting is accurate.

Source document

It’s provided only after the goods have been transferred or services have been rendered and the client has paid in full. Sales receipts are internal documents for sellers and external documents for buyers. There are a number of possible controls that can be used to reduce the risk different types of accounting that source documents are not properly recorded in an accounting system. One of the more common controls is to pre-number documents, so that missing documents are easier to track down. To complete the accounting records, a bookkeeper needs to have source documents to work from.

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Depending on the nature of your business, the types of source documents that you need to retain will vary. Examples of source documents, and their related business transactions that appear in the financial records, are noted below. In the modern era, many businesses and individuals choose to store source documents in electronic form.