Which Of The Following Would Be Considered A Source Document In An Accounting System? (Check All That Apply.)

The correct options of this multiple choice question (mcq) are A, B, C and D as a Source Document is used to support Business Transactions and issued in order to enter the business events into the accounting system and all of these are examples of source documents.

A. Checks

A check / cheque is issued as a proof of payment made to a payee (named on it) by bank. There is a written order to the bank to pay the amount of check to the person named on it or to the bearer of the check. A check is a legal document and can be served as an evidence of business transaction.

B. Payroll Records

It shows the payroll records of employees and workers to whom the salaries and wages paid for the past periods. It shows compensation made to them by the company against the work performed or task completed.

C. Purchase Order (PO)

It is issued by the buyer to the seller that the purchase order is made. It contains the details of goods or services ordered. This purchase order is used as an evidence that the buyer accepts the offer of seller and he is ready to pay for goods or services ordered. Purchase order shows that a transaction will be made if the seller approved the order of the buyer. So, this can be served as a document to support a business transaction.

D. Sales Receipt

A sales receipt is issued by the seller to the buyer showing that the payment is received from the buyer against the goods sold or services performed. It is issued in case of cash sales.

The option E is incorrect choice here as a budget is the future planning of income and expenditures for a specific period, e.g., for 5 years, but not a documentation to support business transactions, which are occurred throughout the accounting period, in an accounting system.