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Accounting Report

Accounting Report

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elmer.dalida001
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2 views2 pages

Accounting Report

Accounting Report

Uploaded by

elmer.dalida001
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
Download as docx, pdf, or txt
Download as docx, pdf, or txt
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The importance of recording business transactions in accounting includes:

1. Financial reporting: Recording transactions accurately helps in preparing financial


statements such as the income statement, balance sheet, and cash flow statement.

2. Decision-making: Provides management with the necessary information to make informed


decisions about the business.

3. Compliance: Ensures that the business complies with legal and regulatory requirements
related to financial reporting.

4. Performance evaluation: Helps in evaluating the financial performance of the business and
identifying areas for improvement.

5. Tax compliance: Recording transactions accurately helps in calculating and paying taxes
correctly.

Overall, recording business transactions accurately is essential for maintaining the financial
health and sustainability of a business.

But what is Source Documents?

Source Documents in accounting terms are the physical basis or documents based on which
business transactions are recorded. Source Documents are typically retained for use as a
medium of evidence. In accounting source documents is a piece of paper that proves that a
transaction has occurred. Source Documents contain pertinent information about the
transactions such as the date, the dollar amounts, the involved parties and the purpose of
transactions. These documents serve as proof not only that the transaction has occurred but
also of the details of the transaction.

What is the purpose of Source Documents in Accounting?

Accounting Documents are used to maintain records of a company's financial standing. Not
only do they show the current balances for the company's accounts, but they can also be used
to show patterns of income and spending and provide a picture of the overall health of a
company.

Types of Source Documents:

1. Invoices: Issued by a seller to a buyer, detailing the goods or services provided, the quantity,
price, and terms of payment.
2. Receipts: Acknowledgment of payment received from a customer, providing details of the
transaction.

3. Purchase Orders: Document issued by a buyer to a seller, specifying the goods or services to
be purchased, quantity, price, and delivery terms.

4. Bank Statements: Record of transactions processed by a bank, including deposits,


withdrawals, and other financial activities.

5. Contracts: Legal agreements between parties outlining the terms and conditions of a
transaction, such as sales agreements, lease agreements, and employment contracts.

6. Payroll records: These documents detail the wages and salaries paid to employees, including
deductions for taxes and benefits.

Conclusions:

Source documents are important in accounting because they provide a clear and accurate
record of financial transactions, help in verifying the accuracy of financial statements, support
compliance with tax laws and regulations, and serve as evidence in case of audits or disputes.
They also help in tracking and monitoring cash flow, expenses, and revenue, which is essential
for making informed business decisions.

Group 1

Hanna Jane Ballarta

Shekinah Glory A. Liberato

Fernando Jose Bautista

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