Voucher definition

A voucher is an internal document describing and authorizing the payment of a liability to

a supplier. It is most commonly used in a manual payment system. A voucher typically
contains the following information:

 The identification number of the supplier

 The amount to be paid
 The date on which payment should be made
 The accounts to be charged to record the liability
 Any applicable early payment discount terms
 An approval signature or stamp

Voucher information may be assembled into a packet, where the basic voucher document
is attached to the supplier invoice, evidence of receipt, and purchase order. This packet is
useful for keeping related documents in one place, and makes it easier to both justify
and audit payables transactions.

A voucher is created following the receipt of an invoice from a supplier. It is stamped

"paid" when a check or electronic payment is made to a supplier, and is then archived,
along with any supporting documents.

Vouchers are useful for maintaining a higher level of control over the payables process.

If vouchers are used for all payables, their totals can be aggregated to determine the total
amount of accounts payable outstanding. This function is not needed in a computerized
system, where the aged payables report is used instead.

A voucher is not created when a liability has only been accrued (which is in the absence of
a supplier invoice). Also, vouchers are not used in the payroll process.

How is a voucher used in accounts payable?

Definition of Voucher
A voucher is often a prenumbered form used in the accounts payable department to
standardize and enhance a company's internal control over payments to its vendors and
service providers.
Example of a Voucher
You could think of the voucher used in accounts payable as a cover sheet to which
necessary supporting documents and approvals are attached. Some of the supporting
documents include:

 The vendor's invoice

 The company's purchase order
 The company's receiving report
 Payee/vendor name
 Discount terms
 Amount and date to be paid
 General ledger account numbers to be charged
 Authorizing signatures
The voucher is then recorded in the voucher register.

The unpaid vouchers provide the detail for the total amount reported as vouchers payable
or accounts payable.
As a voucher's payment date comes near, the voucher is forwarded to an authorized
person for payment. After making payment, a copy of the check is attached and the
voucher is stamped "Paid." It is then filed in the paid voucher file in order to prevent a
duplicate payment.

What is the difference between an invoice and a voucher?

Definition of an Invoice
An invoice received from a vendor is a billing for goods or services that it had provided.
The vendor's invoice will include the quantities of the items provided, brief descriptions,
unit prices, amount due, credit terms, where to remit payment, etc.
Definition of a Voucher
A voucher is an internal document used by a company's accounts payable department in
order to collect and organize the necessary documentation and approvals before paying a
vendor's invoice. The voucher acts as a cover page to which the following will be attached:
vendor's invoice, company's purchase order, company's receiving report, and other
information needed to further process the vendor's invoice for payment.
What is a petty cash voucher?

Definition of Petty Cash Voucher

A petty cash voucher is usually a small form that is used to document a disbursement
(payment) from a petty cash fund. Petty cash vouchers are also referred to as petty cash
receipts and can be purchased from office supply stores.
The petty cash voucher should provide space for the following:

 Date
 Amount disbursed
 Person receiving the money
 Reason for the disbursement
 General ledger account to be charged
 Initials of the person disbursing the money from the petty cash fund
Some petty cash vouchers are prenumbered and sometimes a number is assigned for
reference and control. Receipts or other documentation justifying the disbursement should
be attached to the petty cash voucher.

When the petty cash fund is replenished, the completed petty cash vouchers provide the
documentation for the replenishment check.
 Example of Petty Cash Voucher

Shown above is an example of a petty cash voucher.

PROCEDURE OF PREPARATION OF VOUCHERS

Voucher preparation is very important and responsible job of an accountant. Before he

prepares the vouchers, he has to clear the following terms:-
What is Voucher ? First of all, we would like to understand the meaning of voucher. Voucher is
a very primary accounting record which shows the authenticity of the transactions. In business
so many transactions take place. To record any transaction in account books, first of all a
voucher is prepared by the accountant. Therefore, we call the vouchers as the base of the
accounting system.

Voucher is prepared by the accountant with the help of source document. Source
document means any proof relating to the business transactions. These documents include:-
bills, cash memos, receipts, bank deposit slips, cheque book counter foils, challans and other
details which show the happening of any transaction in a business firm.

The proforma of a voucher depends from company to company but all the vouchers have
almost same details which are to be shown in it. A voucher shows the following details:-

 Serial number of voucher

 Type of Voucher
 Date of Voucher
 Debit Column
 Credit Column
 Amount in figures and words.
 Total Column
 Particulars column in which brief description of the transaction is being mentioned
 Signature of accountant
 Signature of Manager or other authourised person.
 In Case of Bank Payment Voucher or Cash Payment Voucher, signature of receivers is also
shown.
Types of Vouchers:- Generally, the following types of vouchers are prepared in a business
firm:-

 Cash Payment Voucher

 Bank Payment Voucher or Cheque Payment Voucher
 Cash Receipt Voucher
 Bank Receipt Voucher or Cheque Receipt Voucher
 Contra Voucher
 Purchase Voucher
 Sales Voucher
 Journal Voucher
 Sales Return Voucher
 Purchase Return Voucher
Duties of Accountant in respect of preparation of any voucher:-

Vouchers are the base of whole accounting system. The accountant has to be very careful while
preparing the vouchers. Voucher is an initial document of accounting system. If there is any
mistake while preparing the voucher then every thing, automatically will become wrong.
Therefore, an accountant must follow the following procedure while preparing the vouchers:-

1. He must verify the supporting documents thoroughly in respect of date, amount, nature of
transactions etc.
2. The supporting documents must be approved by an appropriate authority.
3. Then, the accountant has to select the type of voucher to be prepared for the transaction.
4. He must have the thorough knowledge of accounting rules.
5. He has to make sure that the total of debit and credit side of voucher are equal.
6. The accountant must have good command over the various accounting heads which are
supposed to be debited or credited.
Simple Rules of Accounting:- As we know that the voucher contains debit and credit part. But
what is debit and what is credit? One has to understand it very thoroughly because whole
accounting system depends on debit and credit. In accounting system we follow the double
entry system. It means that according to the nature of transaction, one account head is to be
debited while other account head is to be credited with the same amount.

Account head means a name of account under which all similar type of transactions are
recorded. For example:- All expenses relating to printing and stationery will be debited under
“Printing & Stationery Expenses Account” head. All Sales will be recorded under “Sales
Account” and so on.These accounting heads are prepared after keeping in view the
requirement of management or by concerned laws. Normally, the nature of the transactions
are self explained by the account heads.

At the time of preparation of voucher, the accountant must assign the correct account head
otherwise every thing will be wrong and will result into wrong information. Therefore, every
voucher is checked by some supervisor to avoid the mistakes. Every voucher must be signed by
the accountant and the supervisor and must be supported with proof of transaction.

Rules of Debit and Credit

Following are the simple rules for Debiting or Crediting the Accounting Heads:-

Rule No. 1:- Debit what comes in i.e. any thing which is received by firm in physical
position.

Examples:-

(a) Cash received by the business firm. In this case, cash is coming in the business.
Therefore, Cash Account will be debited.

(b) Furniture purchased by business firm. It means furniture is coming in the business.
So, Furniture Account should be debited.

Rule No. 2:- Credit what goes out i.e. any thing which goes out of the business firm in
physical position.
Examples:-

(a) Cash paid by the firm. It means cash is going out of the firm. In this case the Cash
Account will be credited.

(b) Suppose a company has sold its old vehicle, then the Vehicle Account will be credited
because the vehicle is going out of the business.

Rule No. 3:- Debit the receiver. Here, receiver means any third party.

Examples:-

(a) Goods sold to M/s ABC Limited. In this transaction, the receiver is M/s ABC Ltd.. Therefore
M/s ABC Ltd. will be debited.

(b) Cash paid to M/s Supple Rubbers. In this example, M/s Supple Rubber is receiver.
Therefore, M/s Supple Rubber will be Debited.

(c) Cheque received from a party and deposited in to bank. In this case, The Bank is the
receiver of cheque. Though, initially the cheque is received by the business firm but it has no
physical value unless it is deposited in to bank. Therefore, The Bank Account will be debited.

Rule No. 4:- Credit the giver. Here, giver means any third party.

Example:-

(a) Cash received from M/s Bombay Rubber Chemicals. In this case, M/s Bombay Rubber
Chemicals will be credited since they are the giver of cash.

(b) Goods purchased from M/s Morning Place. In this example, M/s Morning Place will be
credited since they are the supplier of goods.

Rule No. 5:- Debit all the Expenses.

All expenses of a business firm must be debited to a suitable account head.

Example:-
(a) Conveyance Expenses paid to a staff. In this case Conveyance Expenses Account should be
debited.

(b) Salaries paid to employees should be debited to Salaries Account.

(c) Expenses relating to traveling should be debited to Traveling ExpensesAccount.

(d) Depreciation on Fixed Assets should be debited to Depreciation Account.

Same way, different type of expenses in respect of business should be debited to concern
account heads.

Rule No. 6:- Credit all the income.

All income of a business firm should be credited to suitable account head.

Example:-

(a) Sale of goods:- Sales of trading items, should be credited to sales account because sale
is the income of a business firm.

(b) Interest received from banks or from other parties:- Interest Received account will be
credited in case of interest receipts.

(c) Commission received:- In this case Commission is income of business firm. Therefore,
Commission Received will be credited.

In similar way, any other income of a business firm, will be credited in suitable heads.

IMPORTANT NOTES TO BE REMEMBERED IN CASE OF SELECTION OF PROPER ACCOUNT

HEAD

1. Every receipt is not an income:- For example – Receipts may be relating to personal
account not an income

2. Every payment is not an expenditure:- For example – Payment may relate to Personal
accounts is not an expenditure.
3. There are certain cases where no payment is made, even then the expenditures are
debited. For example:- Depreciation of fixed assets, Expenses payable or provision for
expenses.

4. There are certain cases where no amount is received, even then income is credited. For
example:- Interest receivable, Commission receivable etc.