Do source documents provide the input for the accounting process?

• A. False
• B. True
• C. Only for cash transactions
• D. Sometimes

Answer: (B)

Source documents are the input for the accounting process. They are the original records that capture the details of each business event before entries are made, such as sales invoices, purchase orders, vendor bills, receipts, checks, and time sheets. They provide the date, amount, parties, and description of the transaction, and they serve as the evidence you reference when recording journal entries.

Because they document exactly what occurred, source documents drive the preparation of journal entries in the double-entry system and create an auditable trail from the transaction to the financial statements. This applies to both cash and non-cash transactions, not just cash transactions. They also support internal controls by ensuring entries are based on verifiable information rather than memory or guesswork.

So, source documents do provide input for the accounting process.