Definition of Voucher
A Voucher is an initial recording document of purchase, sales, receipt or payment. This is considered as the primary document of the business which describes and authorizes the payment of the company. Voucher can be used as manual or computerized system as preferred by business organization.
However, a voucher typically contains the following information:
- Date of the payment
- Head of Accounts of the Payment or received
- Name of the supplier
- The amount to be paid or received
- Authorized Signature or stamp
Types of Voucher
There is three types of voucher :
- Debit Voucher (Payment Voucher)
- Credit Voucher (Receipt Voucher)
- Transfer Voucher
Debit voucher is also known as a payment voucher. This voucher is used when an organization pays to others for Salary and wages payment, Payment for Raw materials, Loan repayments etc. These payments can be made in the form of Cash and Bank payment. Hence, Cash Payment Voucher and Bank Payment Voucher will be treated as the debit voucher also.
Following payments to be recorded in debit voucher:
- Paying cash expenses
- Payment made for purchase of goods
- Payment of investment
- Payment to creditors
- Interest Payments
- Any other payments.
Example 1: IHL Ltd. Purchased Office Equipment @ $ 2,000 from ZXY Ltd. Total payments made in cash by IHL Ltd.
For this transaction, a Cash Voucher to be prepared to record the transaction. The Accounting Entries in this regard are as follows:
|Office Equipment A/c||Debit||$ 2,000|
|Cash A/c||Credit||$ 2,000|
( Equipment Purchased in Cash)
Example 2: IHL Ltd paid loan installment to UCB Ltd. Total installment amount is $10,000 including the interest amount $1,500. For this total payment, IHL issued an Account Payee cheque in favor of UCB Ltd from its Current Account: 000-03158-2516.
The Accounting entries in this regard are as follows:
|Loan Outstanding A/c||Debit||$ 10,000|
|Interest Payable A/c||Debit||$ 2,000|
|Current A/c – 03158-2516||Credit||$12,000|
(Being Loan installment is paid)
The format of the Debit Voucher:
The credit voucher is prepared when an organization received money from :
- Customers against sales revenue
- Shareholders against equity capital
- Fixed Assets sales
- Interest earned
- Debtors, and
- any other received by an organization collected from various sources.
This voucher can be divided into two types. Such as – Cash receipt Voucher and Bank Receipt Voucher.
Example 1: KSRM Ltd. sales 10,000MT MS Rod @ $ 700 to IHL ltd. Total Sales in this respect is $ 70,00,000, and the entire amount is received by A/c Payee Cheque. The total amount is credited to KSRM’s Current Account No. 586-213
Accounting treatment is as follows:
|Current A/c 586-213||Debit||$ 70,00,000|
|Sales A/c||Credit||$ 70,00,000|
(Cash received against sales to IHL Ltd)
The format of Credit Voucher:
Non-Cash voucher or, Transfer Voucher, or Journal Voucher
Except for Cash and Bank receipts and Payments, all transactions are recorded in Transfer Voucher. This voucher also referred to as the Journal Voucher. Usually, this voucher is prepared for credit sales, or credit purchase, or Transfer any property, or for any other transactions in which no cash or bank transaction is involved. List of transactions which will be recorded in non-cash vouchers are as follows:
- Credit purchase or credit sale of goods
- Credit purchase or sale of fixed assets
- Goods return in respect of purchase or sales on credit
- Written off bad debts
- Any other non-cash transactions