Voucher: Document that Acknowledges a Liability and Authorizes Payment

A comprehensive guide to understanding vouchers, their types, uses, and relevance in accounting and financial management.

A voucher is an accounting document that acknowledges a liability and provides authorization to pay the debt. It serves as a written confirmation of a business transaction, detailing the nature and amount of the expenditure and granting approval for the payment.

Key Features of a Voucher

Types of Vouchers

• Payment Voucher

  • Used to authorize payments.
  • Example: Office supplies receipt, vendor invoices.

• Receipt Voucher

  • Acknowledges receipt of cash or bank payments.
  • Example: Sales receipt, rental income receipt.

• Journal Voucher

  • Records non-monetary transactions.
  • Example: Adjustments for depreciation.

Voucher Components

• Date: When the transaction or expense occurred.
• Amount: The specific amount to be paid or received.
• Description: Detailed explanation of the transaction.
• Approval Signature: Authorized personnel who approve the payment.
• Supporting Documents: Invoices, receipts, or internal memos.

The Role of Vouchers in Accounting

Vouchers play an essential role in the accounting cycle:

• Recording: Vouchers are recorded in the financial records.
• Verification: Vouchers confirm the legitimacy of transactions.
• Authorization: Ensure only authorized payments are made.
• Internal Control: Strengthen internal controls by providing documentation.

Historical Context of Vouchers

Origin

The use of vouchers dates back centuries as paper trails for transactions. Historically, they were critical in manual bookkeeping systems to document and verify financial activities.

Evolution in Business Practices

With the advent of digital systems, vouchers have evolved to electronic formats. Electronic vouchers (e-vouchers) provide the same functions as traditional paper vouchers but with enhanced efficiency and integration with financial software.

Practical Examples

Example 1

A company purchases office supplies worth $500:

• Date: September 1, 2023
• Amount: $500
• Description: Office supplies from XYZ Store
• Approval Signature: Manager’s approval
• Supporting Documents: Invoice from XYZ Store

Example 2

A landlord receives a monthly rent payment:

• Date: September 5, 2023
• Amount: $1,200
• Description: September rent
• Approval Signature: Landlord’s acknowledgment
• Supporting Documents: Bank deposit slip

Related Terms

• Invoice: A bill issued by a seller to a buyer outlining goods or services provided and amounts due.
• Receipt: Proof of payment received.
• Authorization: Approval to proceed with a financial transaction.

FAQs

What is the importance of a voucher in business?

A voucher is crucial for maintaining accurate financial records, ensuring all expenses and receipts are properly authenticated and authorized.

How are electronic vouchers different from paper vouchers?

Electronic vouchers are digital versions stored and processed through accounting software, allowing for greater efficiency and integration.

Who is responsible for signing a voucher?

Typically, authorized personnel such as department heads or managers sign vouchers to approve payments.

References

• Accounting Standards Board. Financial Reporting Standards for Small and Medium-Sized Entities (FRS for SMEs).
• International Federation of Accountants (IFAC). Handbook of International Public Sector Accounting Pronouncements.

Summary

A voucher is an essential financial document that validates a liability and authorizes payment. It contains critical information about the transaction and acts as a crucial tool in accounting to ensure proper authorization, recording, and internal control of business expenditures. With historical roots in manual bookkeeping, vouchers have adapted to modern digital systems, maintaining their importance in financial management across varying industries.