Source document
The original record that proves a transaction happened, such as a receipt, invoice, contract or bank statement.
In short
- Every journal entry should point to at least one source document.
- Source documents come from outside the accounting system. The entry is a summary of them.
- If the source document is missing, the entry is an unsupported claim.
A source document is the first evidence of a business transaction. It is created when the transaction happens, usually by someone outside the accounting team: a supplier issues an invoice, a register prints a receipt, a bank produces a statement, a customer signs a contract.
Source documents and entries
Bookkeeping turns source documents into journal entries. The entry records the accounts, amounts and date; the source document proves those figures are real. That relationship is what an audit tests. An auditor selects entries and asks to see the documents behind them, and selects documents and checks that they were recorded.
Common examples
- Sales and purchase invoices
- Receipts for expenses
- Bank and card statements
- Contracts and purchase orders
- Payroll registers and timesheets
- Goods received notes and delivery slips
Documents that the company creates for itself, such as a spreadsheet summarizing expenses, are not source documents on their own. They are useful summaries, but they need the original receipts behind them to carry any weight.
Worked example
Behind one accrual
At year end, an accountant books a $6,200 accrual for legal fees not yet invoiced. The entry cites two source documents: the engagement letter setting the hourly rate, and the law firm's email confirming 24.8 hours worked in December. When the invoice arrives in January, it becomes the source document for the reversal and the final entry.