Voucher

Document used by an organization's accounts payable department to collect and file all supporting documents regarding liability payment

Author: Hassan Saab
Hassan Saab
Hassan Saab
Investment Banking | Corporate Finance

Prior to becoming a Founder for Curiocity, Hassan worked for Houlihan Lokey as an Investment Banking Analyst focusing on sellside and buyside M&A, restructurings, financings and strategic advisory engagements across industry groups.

Hassan holds a BS from the University of Pennsylvania in Economics.

Reviewed By: Sid Arora
Sid Arora
Sid Arora
Investment Banking | Hedge Fund | Private Equity

Currently an investment analyst focused on the TMT sector at 1818 Partners (a New York Based Hedge Fund), Sid previously worked in private equity at BV Investment Partners and BBH Capital Partners and prior to that in investment banking at UBS.

Sid holds a BS from The Tepper School of Business at Carnegie Mellon.

Last Updated:November 9, 2023

What is a Voucher?

It is a document used by an organization's accounts payable department to collect and file all supporting documents required to approve the liability payment.

Governments may also issue these that can be redeemed for programs such as school choice, housing, or social welfare initiatives.It can also be referred to as a redeemable document for a good or service, such as a coupon or ticket. This is particularly noticeable in the hospitality industry. 

For example, airlines, hotels, and restaurants may issue these that can be exchanged for rooms, flights, or fares. It is essentially an account payable backup document. Accounts payable are short-term bills that businesses owe to vendors and suppliers.

It is significant because it serves as an internal accounting control mechanism, ensuring that all payments are properly authorized and the goods or services purchased are received.

Throughout an accounting period, companies have a variety of short-term financial obligations to suppliers and vendors. For example, a company may need to purchase inventory or raw materials from suppliers to manufacture the company's goods.

The suppliers essentially grant the company an extension of credit, allowing payment to be made shortly, such as 30, 60, or 90 days.

Key Takeaways

  • It is a document used by the accounts payable department of a company that contains the supporting documents for an invoice.
  • It is essentially a backup document for accounts payable, which are bills owed to vendors and suppliers by businesses.
  • This may contain documents such as the supplier's invoice, the amount owed, the due date, general ledger accounts, and shipping receipts.
  • All outstanding amounts are totaled, and the total is recorded as accounts payable on the balance sheet.
  • Governments and private businesses also use these redeemable for various goods or services.

Components of accounting Voucher

A voucher accounting system is typically part of a manual payment system with a robust control mechanism.

Source documents such as challans, counterfoils, checkbooks, receipts, bank deposit slips, bills, cash memos, and other information are used to prepare this. The source documents are relevant to the financial transaction and attest to its existence.

The following are specific data and information which are found:

  • Voucher code
  • Accounting vouchers' dates and types
  • Columns of credit and debit
  • The Particulars column contains a brief description of the transaction's record.
  • Supplier Identification Number
  • The total amount owed in words and figures
  • Totals column
  • The payment deadline
  • Account number under which the liability is created
  • Discount or other scheme terms and conditions
  • Accountant's approval stamp and signature

Points to keep in mind

Preparation of these documents can be a difficult task. Therefore, the accountant must exercise caution when preparing for the transaction. Every last detail should be double-checked and verified. The following are some of the significant points that the accountant should consider while preparing:

  1. First, the documentation should be thoroughly verified.
  2. Second, an authorized signatory must sign the supporting documents.
  3. Third, the accountant should use the appropriate type for the transaction.
  4. Finally, its credit and debit sides must be tallied and balanced.
  5. The accountant must ensure that the correct account head is mentioned on it. This ensures that the transaction is recorded correctly.

Special Considerations

The balance sheet records the total amount with outstanding balances owed as accounts payable. When it is paid, the proof of payment is included in it, and it is marked as paid.

When an audit is performed, these are critical sources of evidence. An auditor follows procedures to determine whether the financial statements contain material misstatements. 

This proves that the goods purchased were received, supporting the auditor's claim that the goods and services listed on the financial statements exist.

It also serves to justify the firm's cash payments to vendors and document the general ledger accounts used to record the transaction.

Using these in the accounting system also reduces the possibility of employees working together to steal company assets. In addition, businesses use segregation of duties to prevent employee theft, meaning critical tasks are assigned to different people within the organization. 

It is a document where multiple people perform the tasks and creates a paper trail so an auditor can confirm that the duties were segregated correctly.

Types of Voucher

Let us understand the types used; some are mentioned below:

1. Receipt 

This is used to record bank or cash receipts. It is also known as a credit voucher. These are of two kinds:

  • Bank receipt: Bank receipt documents the receipt of a demand draft or a cheque. 
  • Cash receipt: A cash receipt is created for the cash received.

Bank Receipts imply that the money is received in the bank rather than in cash.

2. Payment

This is the polar opposite of the receipt one. While that represents an inflow of funds, a payment voucher represents an outflow of funds. The purpose of creating these is to record an organization's cash and bank transactions for payment.

These are also known as debit vouchers. They are divided into two types:  

  • Bank payment: Demand draft or cheque payments are recorded in a bank payment voucher.
  • Cash payment: Cash payments in an organization are recorded in a cash payment voucher, 

3. Journal

These can also be referred to as transfer or non-cash vouchers. They are used to record all transactions that do not involve cash or bank transactions or the inflow and outflow of funds. 

They are genuine documentary evidence of the financial transaction.

For example, it is prepared when goods are sold on credit, and there is no immediate cash or bank transaction. Instead, the debtor is debited to complete the accounting entry, and the sales account is credited.

4. Sales

This is used to record any sales transaction for goods and services. Also, it is prepared to record the organization's cash and credit sales. The appropriate debtor account is debited, while the sales account is credited. 

Besides, it is proof and evidence of the organization's sales transactions for goods and services.

5. Purchase 

This document records the purchase of goods and services in an organization. The investment can be made in cash, bank transfer, or credit. When a purchase is made on credit, the relevant supplier is credited. 

It is accompanied by several supporting documents, including a purchase order, a supplier slip, and other documents related to the required purchase.

6. Supporting 

Any transaction that has previously occurred in the organization is recorded in this. It is written documentary proof of past events in a company. 

For example, they are attached to the expense bill to support the leading voucher. Fuel bills, for example, can prove an employee's transportation.

Researched and authored by Falak Anjum | LinkedIn

Reviewed & Edited by Ankit Sinha | LinkedIn

Free Resources

To continue learning and advancing your career, check out these additional helpful WSO resources: