What is Voucher?
A voucher implies a source document, generally prepared for the purpose of future reference that keeps a record of the ground on which the transaction took place. Hence, it acts as documentary evidence of that transaction as it backs the entries recorded in the journal.
It must be noted that a transaction can only be entered in the books of accounts only when there is some documentary evidence present in its support.
What does it do?
A voucher is an accounting document that indicates the flow of resources, be it goods, assets or money, inside or outside the organization. It authorizes receipts and payments and shows the ledger account where the record of these transactions can be found.
In general invoice, cash memo, receipt, counterfoil of a receipt, written requisition slip, resolution passed in meeting, pay-in-slips. purchase invoices, debit note and credit note are some important documents which are considered as vouchers in business. Further, there is no formal format of the voucher, and that is why it differs from one organization to another.
Vouchers are required to be preserved until the audit and tax assessments for the concerned period is completed, so as to avoid any issues in future.
Salient Features of Vouchers
A voucher has the following features:
- It is written documentary evidence.
- It supports the entry, that appears in the company’s books of account
- It states complete details of the transaction
- It justifies the correctness of the entries made in the books.
- It is pre-numbered, which helps in simplifying the audit trail.
- It is for internal accounting control, which makes certain that every transaction is duly authorized.
- It is prepared as and when the transaction takes place.
- It contains true and complete details of the transactions
- It is prepared by the firm’s accountant and countersigned by the firm’s authorized signatory.
Classification of Vouchers
On the basis of Recording of Transactions:
- Transaction Voucher: Transactions having a single debit and credit are simple transactions, and the vouchers prepared for these transactions are Transaction vouchers.
- Compound Voucher: Transactions having more than one debits or credits and single debit or credit are compound transactions and the voucher prepared for these transactions are Compound vouchers.
- Complex Voucher: Transactions of more than one debits and more than one credits are known as complex transactions and the voucher prepared for the same is a complex voucher/journal voucher.
On the basis of source:
- Primary Vouchers: The written documentary proof, existing in original form is regarded as a primary voucher. It may include purchase invoices, counterfoil of cash receipts, and so forth.
- Collateral Vouchers: If the original written documentary proof is not present, but their copies are available, these are called collateral vouchers. In such cases, copies of such documents are provided for auditing purposes. Photocopies of the demand draft are one common example of collateral vouchers.
Contents of Voucher
As the voucher is documentary proof stating the facts of the transaction, so it has to be prepared with great caution and care. A printed voucher is generally preferred. The contents of the vouchers include:
Name and Address of the Firm: Every Voucher must contain the name and address of the company, in printed form, at the top.
Voucher Number: Vouchers bear a unique serial number, for the purpose of easy identification. This also helps in differentiating with other vouchers and entering their reference in the account books. So, the vouchers are sequentially numbered and their number is added against the posting made.
Date: A voucher carries a particular place to indicate the date on which the voucher is written when the transaction took place.
Details of Party to be Debited: This section contains the name and address of the party with whom the transaction is performed by the company and payment has been made. Further, the objective and description of such payment are also entered.
Details of Party to be Credited: The payment made via cash or cheque/demand draft. So, the cash or bank account is credited, along with the number and date of issue of the cheque and demand draft.
Proof of amount received: When payment is given in the form of cash to any party, full details with amount, purpose and date of payment received by the party is mentioned in the voucher and the signature of the receiver is obtained. However, when the payment is made via account payee cheque, the receiver’s signature is not mandatory.
Revenue stamp: In every voucher, as per law, every payment of Rs. 500 or more, revenue stamp needs to be affixed. and the receiver of the payment must touch a certain part of that stamp.
Signature of the Accountant: The voucher must bear the signature of any designated person of the firm be it an accountant or any other officer along with his/her name. Once the verification is performed, it has to be signed by the owner or any other authorized officer of the company.
In a nutshell, the voucher is a written or printed document used to support the entries recorded in the company’s books of accounts. It can be any reasonable written proof, that validates the financial transaction.