Source Document
The original paper or electronic record that serves as evidence that a financial transaction occurred.
What is Source Document?
A source document is the primary evidence that a financial transaction took place and is the starting point for the accounting entry cycle. Examples include sales invoices, purchase orders, receipts, bank statements, cancelled checks, payroll timesheets, and shipping records. Auditors rely on source documents to verify that recorded transactions are genuine, accurately valued, and properly authorized. Under most accounting frameworks, businesses must retain source documents for several years — typically five to seven — to satisfy audit and regulatory requirements.
Example
During an audit of XYZ Corp, auditors traced a $50,000 equipment purchase recorded on January 10 back to three source documents: the vendor invoice, an approved purchase order, and a bank wire confirmation. All three matched, verifying the transaction's existence and accuracy.