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A voucher is an internal document that is used to support accounting entries. It is considered as a redeemable transaction bond that has a monetary value and can be used for particular purposes.
Voucher
A voucher is a document used by a company’s accounts payable department to compile and file all supporting evidence needed to approve a liability payment. Governments may also issue vouchers that can be used for a range of programmes, including school choice, housing, and social assistance.
A voucher is a backup record for accounts payable, which are bills that firms owe to vendors and suppliers. A voucher might contain the supplier’s invoice, the amount owing, the due date, shipping receipts, and general ledger accounts, among other papers. The total amount of outstanding vouchers owed is totalled on the balance sheet, and the result is shown as accounts payable.
Voucher in Accounting
Accounting vouchers are generated by the organization’s accounts clerk or accountant and countersigned by an authorised signatory on the basis of supporting vouchers. It is immediately entered in the books of accounts after it is signed. Both cash and non-cash purchases are covered by these vouchers. The voucher is necessary as it serves as an internal accounting control tool which ensures that all payments are correctly authorised and goods or services which are purchased are received.
Objectives of Vouching in Accounting
The auditors’ method of judging the authenticity of entries in the financial statement is known as vouching. The auditing’s success or failure is determined by the procedure and accuracy used to accomplish vouching.
There are following objectives of vouching which are given below:
- To ensure that all transactions occurred throughout the financial year for business purposes solely (and not for personal gain), and that they were properly recorded in the books of accounts with honest and fair proof.
- To ensure that the totalling and carrying forward amounts in the financial statements are correct.
- To see if the person in charge of the firm has double-checked his records.
- To ensure that financial records are free of errors.
- To ensure that financial records are created in accordance with the law.
Supporting Voucher
The supporting vouchers are created at the moment of transaction. Supporting vouchers are documentary proof of business transaction, which are in writing form, in support of transaction which has occurred, and source vouchers are used to make entries in the books of account.
Types of Supporting Voucher
There are two types of supporting voucher which are given as:
- Internal voucher
- External voucher
External Voucher
An external voucher is the voucher which is written and provided to the company by a third party. For instance, bills of exchange, cash memos and invoices from suppliers, rent receipts, debit and credit notes, and so on.
External Voucher Examples
The external voucher examples include vouchers which are generated for expenses like debit note received, credit note received, cash memo received from sellers and more.
Debit Voucher
Debit vouchers support cash payments and are thus prepared for recording transactions involving cash outflows like the purchase of goods, the acquisition of fixed assets in cash, the purchase of investments in cash, the payment of creditors, the granting of loans and advances to staffs and other parties, the cash payment of salaries, and the cash deposit to the bank. When a cash payment is made, one side is the cash, while the other is the party to whom the payment was made.
Credit Vouchers
Credit vouchers, unlike debit vouchers, support cash receipt and are used when transactions related to cash receipt are involved, such as cash sales of goods, cash sales of fixed assets, cash receipt of interest and rent, cash received from accounts receivable, cash sale of investments, receipt of money owed to employees as a loan, cash withdrawn from the bank, and so on. When it comes to cash receipts, there are two aspects to consider: the cash itself and the party who has received the cash.
Non – Cash Voucher
Non-Cash Vouchers are vouchers prepared to facilitate non-cash transactions like credit sales of fixed assets, credit sales of investments, credit purchases of goods, depreciation, bad debts, and inward or outward returns. Non-cash vouchers include credit notes, debit notes, invoices, bills, and so on. Transfer vouchers are another name for non – cash vouchers. Such vouchers are created in both debit and credit formats at the same time.
Conclusion
A voucher is a backup record for accounts payable, which are bills that firms owe to vendors and suppliers. A voucher is generated after receiving a vendor invoice and successfully matching it to the purchase order. A large number of bills can be paid at once, reducing the number of cheques needed. The objective of the voucher is to ensure that the totalling and carrying forward amounts in the financial statements are correct.
