In addition, source documents are also essential in the auditing process. Nowadays, these documents do not necessarily need to be a physical hard copy – they may be in a traceable electronic form. Source documents are, first and foremost, important to the bookkeeping and accounting process because they serve as physical evidence that a financial transaction actually occurred. Whether checks are written to be paid out, sales are made to generate receipts, billing invoices are sent by suppliers, or work hours are recorded on an employee’s timesheet – all the respective documents are source documents. This paper trail is referred to in accounting as source documents. ![]() ![]() Every time a business is involved in a financial transaction, a paper trail is generated.
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