Month End Glossary

Source Document

A source document is an original record that contains the essential details of a financial transaction.

A source document serves as the initial record created for any financial transaction, acting as the foundational proof for subsequent accounting entries. These documents are essential in accounting systems as they provide unbiased evidence of a transaction and verify the existence of said transaction before it is recorded in ledgers or financial statements. Examples include invoices, receipts, purchase orders, and bank statements.

When managing financials, such as during the monthly closing process, source documents are reviewed to ensure all transactions have been accurately captured and reconciled. For instance, an invoice from a supplier would serve as the source document to record an expense in the accounting system. These documents not only ensure the data's accuracy but also play a crucial role in audits and compliance, offering proper substantiation for all reported figures.

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