Why is the evidence provided by source documents important to acc…

Question

Why is the evidence provided by source documents important to accounting?

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Answer

The evidence provided by the source document is important in the following manners:

It provides evidence that a transaction has actually occurred.
It provides important and relevant information about date, amount, parties involved and other details of a particular transaction.
It acts as a proof in the court of law.
It helps in verifying transactions during the auditing process.

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		(₹)
i.	Sold goods to Ram on Credit	20,000
ii.	Received from Ram	15,000
iii.	Ram returned goods to us	3,000
iv.	Again sold goods to Ram on Credit	10,000
v.	Ram returned goods to us	1,000

Started business with cash ₹ 75,000 and goods ₹ 25,000.
Paid for Rent ₹ 2,000.
Bought goods for cash ₹ 30,000 and on credit for ₹ 44,000.
Goods costing ₹ 50,000 sold at a profit of 25%, out of which ₹ 27,500 received in Cash.
Purchased a Motor-cycle for personal use ₹ 20,000.

		₹
i.	Manu started business with cash	50,000
ii.	Bought furniture for	500
iii.	Purchased goods on credit	4,000
iv.	Sold goods on cash (cost ₹ 500) for	700
v.	Received rent	200
vi.	Purchased goods for cash	1,000
vii.	Withdrew for personal use	700
viii.	Paid to creditors	400
ix.	Paid for salaries	200

	2017 April	₹
05	Returned goods to M/s Kartik Traders	1,200
10	Goods returned to Sahil Pvt. Ltd.	2,500
17	Goods returned to M/s Kohinoor Traders. for list price₹ 2,000 less 10% trade discount.
28	Return outwards to M/s Handa Traders	550