What term refers to the first record of a business transaction?

• A. Trial Balance
• B. Balance Sheet
• C. Source Document
• D. Income Statement

Answer: (C)

The first record of a business transaction is the source document. This original piece of evidence captures the transaction details at the moment it happens, including date, parties involved, amounts, and purpose. Examples include a sales invoice, purchase order, receipt, or bank slip. This document starts the accounting process because its information is used to prepare the journal entry, which is then posted to the ledger. After posting, the trial balance is prepared to check that debits equal credits, and financial statements like the balance sheet and income statement are produced. The source document is essential for an accurate audit trail and helps ensure records reflect what actually occurred.