Question

What is the first step in the accounting processing cycle? What role do source documents fulfill in this step?

Option 1: Document Validation
Option 2: Data Entry
Option 3: Source Document Role
Option 4: Transaction Recording

Answer 1

The first step in the accounting processing cycle is Transaction Recording, where source documents provide evidence and details for the financial transactions.

Step-by-step explanation:

The first step in the accounting processing cycle is Transaction Recording. This step is crucial as it involves the documentation of financial transactions as they occur. Source documents play a vital role in this step and serve as the foundation for this process. They provide evidence and necessary details of the business transactions that take place. These documents include invoices, receipts, checks, and purchase orders among others. They prove the authenticity of the transactions and are used to ensure that the data entered into the accounting system is accurate and complete.