Source documents and their role in accounting

Question 1

What are source documents?

Answer 1

Source documents are evidence that a financial transaction has occurred and provide details of the transaction.

Question 2

what are the functions of source documents?

Answer 2

Provide verifiable evidence of a transaction.
Ensure Accounting reports provide faithful representation of real-world events.
Provide evidence required by the ATO for income and GST obligations.

Question 3

What is goods and services tax (GST) and how is it calculated?

Answer 3

GST is a 10% tax levied by the federal government on the sale of goods and services.
To verify & calculate GST:
Businesses must track GST on sales/services or purchases (owed to the ATO).
Find included GST = %11
add GST = x0.1
GST collected by the business when cash sales are made is owed to the Government, as it collected by the business on behalf of the ATO.

Question 4

what are cash transactions and source documents?

Answer 4

When Cash Is Received
Source Document: Cash Receipt
Can be handwritten, electronic, or from a register (includes EFTPOS/credit card info)
Must include:
Date of transaction
Amount received
Reason for transaction
GST amount
Total price including GST