Describe the events recorded in accounting systems and the importance of source documents in those systems? - Bzziii

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Describe the events recorded in accounting systems and the importance of source documents in those systems?









It is beyond human capabilities to memorise each financial transaction and that is why, source documents have their own importance in accounting system.
Source documents are the physical basis upon which business transactions are recorded. Source documents are typically retained for use as evidence when auditors later review a company's financial statements, and need to verify that transactions have, in fact, occurred. They usually contain the following information,

  • A description of a business transaction

  • The date of the transaction

  • A specific amount of money

  • An authorizing signature

They are considered as an evidence of transactions and can be presented in the court of law.

Source document in accounting is important because of the below given reasons:

1. It provides evidence that transaction has actually occurred.

2. It acts as an evidence in the count of law.

4. It helps in verifying the transaction during the auditing process.



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