Significance of Voucher Approach in Accounting?

VOUCHER APPROACH IN ACCOUNTING

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Voucher Approach in Accounting

Voucher means a written statement that serves to confirm or witness for some facts like a Transaction. Primarily, it is a document that shows goods purchased or services rendered, authorizing the payment and indicating in the ledger account in which these transactions have to be recorded.

Benefits of Voucher Approach in Accounting

  • Vouchers are useful for maintaining a higher level of control over the payable resources.
  • Several invoices can be paid at once (reducing the number of checks).
  • It can be pre-numbered, which simplifies the audit trail for payables.
  • Invoice approval is separated from invoice payment, it makes easier to schedule both to maximize efficiency.
  • Payment of the invoices is done by the cashier, who reports to the treasurer.

Types of Voucher Approach in Accounting

There are four different types of Vouchers in Accounting. They are:

Debit or Payment Voucher:

A Payment voucher is used to record a payment of cash or cheque. In this case, the cash/bank will be credited and there will be an outflow of funds.

Credit or Receipt Voucher:

A Receipt voucher is used to record cash or bank receipt.

Here, there is an inflow of funds. 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.
Non-cash or Transfer Voucher:

Non-cash vouchers are used for non-cash transactions. They are basically used as documentary evidence. e.g., Goods sold on a credit basis. In these cases, the cash / bank account of the assesses is not affected.

Supporting Voucher:

Supporting voucher serves as documentary evidence of the transactions happened in the past. For example, you can attach the bill of an 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

Preparation of Voucher Approach in Accounting

The main steps involved in the preparation of vouchers are as follows:

  • The company gets in touch with the supplier to place an order for raw materials or semi-finished goods. If the supplier agrees with the order’s specifications and the amount, then the firm places the order with them.
  • The supplier prepares and sends the order consignment to the firm. There is a quality control check to see if there are no defective or damaged items in that consignment. The person/s responsible for quality control also check if the order matches the specifications.
  • After the firm is satisfied with the order, it creates a voucher for the transaction with the relevant details and supporting documents.
  • The voucher Approach in Accounting and the supporting documents get thoroughly checked by both parties to ensure zero errors. Post that, the company pays the supplier for the consignment.
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