Which term describes a paper used to record a transaction before posting?

• A. Trial balance
• B. Source document
• C. Journal entry
• D. Ledger

Answer: (B)

The term describes the initial documentation that records the details of a transaction before it is posted. A source document is a paper or electronic form that captures essential information such as date, amount, parties involved, and a brief description, serving as evidence and the basis for the journal entry. Examples include receipts, invoices, purchase orders, and checks. This document ensures accuracy and provides the data needed to record the transaction properly in the journal. After the journal entry is prepared from the source document, the amounts are posted to the ledger, and later the balances are summarized in a trial balance. In contrast, a trial balance is a summary of ledger balances after posting, a journal entry is the act of recording the transaction in the journal, and the ledger is the collection of all accounts.