The next part of the Accounting Cycle is the gathering of documentation. This is often easier said than done, since the receipt isn’t the first thing on someone’s mind when making a purchase. However, documentation is crucial. An accounting transaction requires proof, or it has no place in the books.

Source documents go beyond simple receipts too. There are supplier invoices, packing slips, sales orders, bank statements, time cards, etc — and each transaction needs its own proof.

In order to prove the exchange, the documents should contain the following information:

• A description of the transaction
• The date the transaction took place
• The amount of money involved in the transaction
• An authorizing signature (if needed)

The bookkeeper often spends an inordinate amount of time tracking down documentation — and for good reason. Apart from IRS audits, one principle upon which accounting frameworks are based is the Reliability Principle, which is the idea that only provable transactions should be recorded.

So please be kind to your bookkeeper and keep your receipts for your records — it’s for your own good!