A Vouchers in accounting are a formal written document that is prepared for the buyer as proof of goods or services that have been purchased from the supplier. A Voucher is made for the business to business activities so that all the transactions can be recorded whether it is on a credit or cash basis. It has a specific value for each good or service in the form of a document such as a voucher for rent, a voucher for transportation, a voucher for fixed assets, a voucher for the bill, and so on. It is an easy method for reminding the due payment of each department so that they can clarify according to recorded entries in the voucher’s file.
It is known as a redeem transaction that has monetary value on particular goods.
Vouchers in accounting perform as a witness for the accounts payable department for future due payments to the suppliers and creditors. It is an inside procedure of the company that is done under the insights of the company. Vouchers are not considered as a permanent accounting statement, once the payment is done the voucher’s account will be closed and transactions will be made by the name of the paid voucher in the balance sheet at the end of the financial year.
A voucher is an exporting document that is used under the process of account payable departments so that to control the payments and verify the orders that had been placed with the receiving order, and from vouchers, we can understand how much payment has been paid and left. It is a confirmation of receiving the goods or services from the supplier and acts as a reminder which tells the buyers and debtors that they haven’t to pay yet to the supplier and creditors.
Until the payment is pending, vouchers are invoice supporters that are received by the company but after the payment is made to the supplier, it has no value in accounting but is recorded as a paid voucher in the balance sheet. A voucher is fully authorized by the suppliers and creditors for further process.
How to record vouchers in accounting?
Every organization has its own rules for managing its due payments but vouchers have a common method that helps to record all expenses and liabilities of the company. A voucher describes a time of payment and they are the evidence for a company that they have some fixed time to pay the suppliers of goods payment. It is not just a reminder of due payment rather it is a reminder of a made payment.
First of all, we will describe the terms and conditions are involves at the time of making vouchers and important information regarding transactions in the vouchers in the form of a legal formal document such as :
A voucher contains some documents which are recorded for a future reminder regarding transactions:
- When was the buyer purchased goods from the supplier?
- When was the invoice received from the supplier?
- Date of issuing the voucher from the supplier
- How much payment has been done or how much has been left?
- Includes all the formal details of the supplier such as name, company’s address, phone number, email address, identification number, company ID.
- Confirmation of received goods or services in the form of receipt.
- Signature of the account payable and account receivable in the voucher documents for the authorized process.
- Other additional details like a discount on goods, accounts charged to record the liability.
Steps to record vouchers in accounting
- First of all, mention the PV number on the top or middle of the voucher.
- Then, record the amount in figures and words and the date the voucher is made.
- Mention the method of payment.
- Mention the type of voucher
- Description of the transaction
- A Particular column of cash and credit was needed to fill the cash payment and credit payment amount.
- Specific column for the authorized signature of an accountant, manager, account payables
- Specific column for approval in which involves the name who approved the voucher (supplier and creditors).
Who prepared the vouchers?
Accountants are the only ones in the company who prepare the vouchers of each entry through a given document by the company, supplier, and other authorized people. At the time of preparing vouchers, accountants need to keep some rules in their mind for accuracy in vouchers such as :
- Accountants need to focus on the format of vouchers.
- He has to avoid wasteful errors to prepare a corrective voucher’s data.
- He needs to collaborate with bookkeepers, and other authorized members to verify the information before preparing vouchers.
- He has professional knowledge of voucher’s rules so that he can make mistakes without any errors.
- Always make an equal balance of debit and credit.
- Before preparing the voucher, he needs to choose a type of voucher which is easily understandable for the company and suppliers.
- He must mention all the required information such as date, amount, nature of the business transaction, supplier and buyer name, signature of both parties and accountants for approval.
- Accountants need to focus on the accounting golden rules while preparing accounting vouchers.
Accountants are the only ones responsible for any future unwanted events or unwanted errors in vouchers that create confusion, misunderstanding, and show less information.
How many types of vouchers in accounting?
There are two types of vouchers in accounting that are chosen by the accountant before preparing vouchers. So let’s start discussing the types of multiple vouchers which are involved in those two vouchers.
Vouchers can be prepared by using accounting software, software to reduce chances of errors saves time and effort while preparing vouchers. Vouchers are the most important part of real accounting so accountants need to take a step very carefully so if they use the software for preparing vouchers, it will help in tracking business transactions such as cash memos, salary receipt, credit sales bill, and invoices.
Supporting vouchers
These vouchers contain past evidence of the transactions in the form of documents. These vouchers act as proof for the future purpose which is prepared by the third parties and by the business.
Accounting Vouchers
Accounting Vouchers are the main vouchers in accounting that are used the most by the accountants due to proper format. It records the multiple business transactions in a single voucher or different vouchers.
Cash Voucher
Cash vouchers contain only the transaction related to cash payments and cash receipts.
Debit Voucher
This voucher records only the transaction of cash payments.
Credit Voucher
This voucher records only the transaction of cash receipts.
Non-cash or transfer Voucher
This voucher records only credit transactions instead of cash transactions. For example – credit purchases, and depreciation.
Journal Voucher
This voucher records only the transaction of multiple cash and credit.
What is a journal voucher entry?
A journal voucher entry is a place for recording financial statements where you can put the transaction related to purchasing of fixed assets on cash or credit, sales of fixed assets on cash or credit, depreciation of fixed assets, purchase and sales expenses, provision, accrual income. This voucher is also known as complex vouchers due to involving multiple entries with difficulties.
Journal voucher contains necessary information which is recorded as an evidence
- Nature of the business
- ID number
- Amount of transaction
- Taxes
- Signature of an authorized member
Journal vouchers act as documentary evidence which shows the real invoice given by the third party which is recorded in the books of accounts. Every transaction has a base related to accounting but the accountant needs to find out the voucher entries to make a voucher’s file in the books of accounts.
Purpose of journal voucher entry
The main purpose of journal vouchers is to rearrange the recorded statements and record non-cash transactions in a correct way. A journal voucher is made for adjusting and reviewing the entries and taking out a copy in the form of a voucher file which is approved by an authorized person. A journal voucher works with adjustment entry, reverse entry, depreciation expense, non-cash entries and records them accordingly after including the above necessary details.
How to create an Accounting Voucher in tally?
As we describe above, journal voucher entry consists of all financial records statements divided into some forms when accountants transfer journal voucher entry in tally – Journal voucher entry has some different kinds of modes such as payment from payment mode for all cash and cheque payments.
- Receipt mode for cash and cheque receipts
- Contra mode for cash and bank transactions
- sales mode for cash and credit transactions
- Purchase return mode
- sales return mode
Each entry has a different voucher to prepare but if you want to combine them in a voucher you have to pass all transactions in tally. Tally has two columns – debit and credit which include adjustment entries and reverse entries.
Advantages of Vouchers in accounting
- The main advantage of vouchers in accounting is to perform as evidence for the company.
- Vouchers describe each detail regarding each transaction.
- Accountants have various kinds of vouchers to select from.
- It helps to identify the past transaction with the current transactions.
- Through vouchers, auditors examine the expenses and liabilities of the company.
- It prepares after following all the golden accounting rules.
- It records multiple entries in the single voucher, double-entry voucher, and multiple vouchers.
- Vouchers are the real confirmation of the due payment to the supplier or creditors.
- No longer need to be prepared.
- It helps to compare all the assets and liabilities.
- It is approved by an authorized person such as an accountant, supplier, or company.
- It removes the errors and gives clarity to the supplier and the company.
What are the Features of Vouchers in accounting
- Both parties can check the books of accounts through vouchers.
- Vouchers make sure that all the transactions have been incurred and entered.
- Check the fraud or irrelevant transactions in the books of accounts.
- Record only business transactions related to cash and credit on sales, receipt of bills.
- Vouchers help the company to verify the transactions with the books of accounts.
- Vouchers contain so much documentary information which is required for every organization while maintaining the multiple vouchers.
- Match the transaction with its amount.
- It is responsible for maintaining all the expenses and liabilities.
- It reveals the truth through books of accounts.
What are the Importance of Vouchers in accounting
- It is an important part of internal accounting which shows the expenses and liabilities of the company.
- It reveals the truth by showing received goods with ordered goods.
- Vouchers involve journal entry mode as well as general ledger modes.
- It is considered as a backup document issued by the account payable.
- It is a short-term process for some time until the payment is made to the supplier and creditors.
- Vouchers have proof of paying the payment in the future.
- Each voucher entry is recorded in the voucher’s register in which documents are attached such as an invoice from the supplier, name of the vendor, date of issuing the goods from supplier, the signature of both parties, purchase order, discount on goods, or services, and many more.
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