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CHAPTER 6

VOUCHER APPROACH IN ACCOUNTING

VOUCHER

Business transactions are usually evidenced by an appropriate document such as Cash memo, Invoice, Sales bill, Pay-in-slip, Cheque, Salary slip, etc. A document which provides evidence of the transactions is called the Source Document or a Voucher. At times, there may be no documentary for certain items as in case of petty expenses. In such case voucher may be prepared showing the necessary details and got approved by appropriate authority within the firm. All such documents (vouchers) are arranged in chronological order and are serially numbered and kept in a separate file. All recording in books of account (Journal entry) is done on the basis of these vouchers.

A voucher helps in recording expenses or a liability and further helps in its payment. They are also called source documents as they help in identifying the source of a transaction.

Diagram: Classification of Vouchers

The diagram in the PDF is:

                    CLASSIFICATION OF VOUCHERS
                              │
                ┌─────────────┴─────────────┐
                │                           │
        A Supporting Vouchers       B Accounting Vouchers
                │                           │
        ┌───────┴───────┐             ┌────┴──────────────┐
        │               │             │                   │
   1 Internal      2 External    1 Cash Vouchers    2 Non-cash
     Vouchers        Vouchers          │                Vouchers
                                      │
                            ┌─────────┴─────────┐
                            │                   │
                     (i) Debit Voucher   (ii) Credit Voucher
                       (Cash Payment)       (Cash Receipt)

Different Types of Vouchers

1. Source Vouchers

2. Accounting Vouchers

Source Vouchers/Supporting documents

Documents which are created at the time when a business enters into a transaction are called source vouchers/Source documents, for example, Cash Memo at the time of cash sales, Invoice at the time of credit sales/Purchases, etc. Supporting voucher serves as documentary evidence of the transactions happened in the past. For example, you can attach the bill of

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expense along with the original voucher just to further support the primary voucher. Petrol Bills attached to the conveyance vouchers is a good example of Supporting Voucher.

They are of two types:

(i) External Supporting Vouchers; and

(ii) Internal Supporting Vouchers.

(i) External Supporting Vouchers

These vouchers are prepared by the third parties who are associated with the firm.

For example:

(a) Debit Note Received;

(b) Credit Note Received;

(c) Purchase Invoice Received from the Supplier of Goods, etc. and

(d) Cash Memo Received from the Sellers, etc.

(ii) Internal Supporting Vouchers

These vouchers are prepared by the internal staff on behalf of ‘the firm which are accepted by the third parties for the transaction so happened.

For example:

(a) Debit Note Issued;

(b) Credit Note Issued;

(c) Sales Invoice issued to purchaser of Goods, etc. and

(d) Cash Memo Received from the Sellers, etc.

(e) Pay-in-slip when money is deposited into bank, etc.

Accounting Voucher

These vouchers are prepared on the basis of supporting vouchers by the accounts clerk or the accountant of the organisation and which are countersigned by an authorised signatory. As soon as it is signed, the same is recorded in the books of accounts. These vouchers are made both for cash and non-cash transactions.

The common Accounting vouchers are as under:

(i) Payment voucher/Debit voucher;

(ii) Receipt voucher/Credit voucher; and

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(iii) Transfer voucher/Non-cash vouchers.

(i) Payment voucher/Debit voucher

A Payment voucher/Debit voucher is a record of payment by cash or cheque. When payment is made for an expense, generally a bill is prepared to record full particulars of the claim by the person or organization receiving payment. From the bill, the accounting department prepares a voucher for each payment to be made.

(ii) Receipt voucher/Credit voucher

A Receipt voucher is used to record cash or bank receipt. Receipt Vouchers are of two types:

Cash receipt voucher – It represents receipt of cash in hand.

Bank receipt voucher – It indicates receipt of a cheque or demand draft i.e.; money is not received in the form of cash in hand

(iii) Transfer voucher/Non-cash vouchers

A Transfer voucher/Non-cash voucher is used to record the residuary transactions/non-cash transactions. An internal transaction or a transaction not involving any cash payment or cash receipt is recorded in the transfer voucher. Examples are: Goods purchased on credit; depreciation of assets, outstanding expenses, accrued income, etc.

YouTube Link for Lecture:

Channel Name:

Lateef’s Commerce Academy

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Visual/diagram note

The only major visual diagram in this PDF is on page 28, titled “Classification of Vouchers.” It classifies vouchers into Supporting Vouchers and Accounting Vouchers, with Supporting Vouchers divided into Internal and External, and Accounting Vouchers divided into Cash and Non-cash, with Cash Vouchers further showing Debit Voucher (Cash Payment) and Credit Voucher (Cash Receipt).