Masters India

Voucher and Its Significance

Prakash Matre
Prakash Matre at September 20, 2023

Know Voucher Details

A voucher is a document that acts as evidence for a business transaction. Vouchers have various uses and forms, as will be discussed in this article.

The topics like voucher source document, what is source voucher, voucher example, source voucher class 11, examples of vouchers, examples of voucher, types of vouchers in auditing and following topics have been covered in this article.

1. What is Voucher?

A voucher is a supporting document which the accounts department of a company uses to create and file all supporting documents required for approving voucher. Vouchers help in recording all transactions and make sure that their respective payment is made in an authorized manner and that the purchased goods and services are actually and properly received by the company. Next you will know what valid types of vouchers are.

A purchase voucher is created upon receiving the supplier’s invoice. When payment is made to the supplier, the voucher is stamped as “paid” and then archived with its supporting documents. Purchase vouchers are not created without receiving supplier’s invoices. They are also not used in the process of payroll payment. If vouchers are used for every payable then the total amount of all payables can be aggregated and the total amount of outstanding accounts payable can be determined. However, this function is only needed in the manual accounting system.

The computerized accounting system instead uses the aged payables report. Vouchers are also known as ‘source documents’ because they help identify a transaction’s source. Some of its examples include cash memo, cheque, bill receipt, pay-in-slip, debit note, credit note, invoice, etc.

2. Format of Voucher

A voucher authorizes the payment of a company’s liability to its supplier. It usually includes information such as:

  • Supplier’s identification number
  • Payable amount
  • Payment due date
  • Chargeable accounts for recording liability
  • Early payment discount agreements applicable, if any
  • Approval stamp or signature

A voucher is inclusive of a cover page which provides an explanation of each attachment. The supplier invoice, purchase order, and shipping receipt are attached to the voucher and all its information is reviewed by the owner before signing the cheque. The general ledger accounts used for recording the business transaction may also be listed in the voucher.

3. Types of Vouchers

There are mainly two types of vouchers:

  • Source Vouchers: Source vouchers are those documents which are created by the business while entering into a business transaction. These contain complete information of the transaction and are duly signed by the maker. Source vouchers serve as evidence for business transactions. Some examples of source vouchers are rent receipts, bill receipts during cash sales, etc.
  • Accounting Vouchers: Accounting vouchers are those documents which analyze business transactions from the accounting perspective. They are used for purposes of recording transactions and are usually prepared by accountants based on supporting vouchers. A different individual then approves these accounting vouchers. They are of two types: cash vouchers (e.g. credit and debit vouchers) and non-cash vouchers (e.g. credit note, debit note, and invoices).


4. How do Vouchers Support Audits?

Vouchers of a company act as the main evidence source when an audit is being conducted on the company. Audit is conducted to determine the accuracy and fairness of the organization’s financial statements. The documentation done by a voucher regarding reception of purchased goods and services and payment of expenses supports the assertion made by the auditor about the actual existence of goods and services mentioned in the financial statements. A voucher also helps justify the cash payment made by business to suppliers. It also helps document the accounts of general ledger which were used for posting the transactions.

5. Factoring in Preventing Fraud

Vouchers help in reducing the risk of employees stealing from assets of the company. Segregation of duties helps businesses prevent employees from stealing by assigning critical tasks to different employees in the business organization. The different tasks of completing a voucher such as filling purchase order, approving order, comparing supplier’s invoice with received goods/services, etc. are assigned to different persons. This creates a paper trail which reduces the risk of fraud in the business organization so that the auditor can put a confirmation on proper segregation of duties. This paper trail also helps in finding out who was responsible in case of occurrence of fraud.

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