Question

Describe the events recorded in accounting systems and the importance of source documents in those systems?

Answer 1

Since accounting is regarded as language of the business, It should systematically record all the transactions and event, which affect the result of business and ignore the personal transactions of the proprietor. Before recording in the journal book, all business transactions are expressed in terms of money.
Consequently, relevant business activities which cannot be expressed in term of money such as strikes, value of human resources, policy changes, changes in the composition of board of directors etc are not recorded.thus decision-makers will get information only about monetary aspects of the business enterprises from accounting records. To record, it is assumed that every business transaction has to aspects and both these aspects are recorded by passing an entry in journal book.
Each and every business transaction is based on source documents. In other words, all business transactions are usually evidenced by an appropriate document such as cash memo, Invoice, Sales bill, Pay-in-slip, Cheque, Salary slip etc.
A document which provides evidence of the transactions is called the Source Document or a Voucher. At times, there may be no documentary for certain items as in case of petty expenses. In such case, voucher may be prepared showing the necessary details and got approved by appropriate authority within the firm.
All such documents ( vouchers ) are arranged in chronological order and are serially numbered and kept in a separate file. All recording in books of account is done on the basis of vouchers. Vouchers are the source documents, upon which accounting records are based. Without documentary evidence, we cannot record any transaction actually these vouchers provide a sound and systematic base for accounting.