What Is a Voucher in Accounting & How Does It Work?

An accounting voucher is a fundamental internal document used in an organization’s financial record-keeping system. It ensures the accuracy, proper authorization, and control of financial transactions, forming the basis for transparent audit trails and precise financial records.

Understanding the Accounting Voucher

An accounting voucher is a document that provides evidence of a financial transaction and authorizes its recording in an organization’s accounting system. Its primary purpose is to document, verify, and authorize financial transactions before they are formally entered into the accounting system. Businesses utilize vouchers to bolster internal controls, creating a clear audit trail for each transaction. This practice enhances financial accuracy and helps prevent unauthorized payments or potential fraud within an organization.

Vouchers serve as supporting documents for entries made in ledgers, confirming that a transaction has occurred and is ready for recording. They act as a memorandum of a company’s liabilities, particularly those owed to vendors and suppliers. Issuing a voucher signifies that an invoice has been reviewed and approved for payment, ensuring that all prerequisites of the control mechanism process are met before funds are disbursed.

Essential Components of a Voucher

A typical accounting voucher contains various data elements to ensure comprehensive documentation and proper authorization.

• Each voucher is assigned a unique voucher number for tracking and reference.
• It includes the date of the transaction and detailed information about the payee or vendor involved.
• A clear description of the transaction, such as goods purchased or services rendered, is present.
• The monetary amount is specified, often in both figures and words.
• The voucher identifies the specific accounting accounts to be debited and credited, facilitating accurate entry into the general ledger.
• References to supporting documents, such as invoices, receipts, or purchase orders, are included to validate the transaction.
• Spaces for various approval signatures are provided, confirming that authorized personnel have reviewed and approved the transaction.

Different Kinds of Vouchers

Businesses use various types of accounting vouchers, each serving a specific purpose in documenting financial transactions. Payment vouchers are commonly used to authorize and record outgoing cash payments, such as those made to suppliers or for expense reimbursements. These vouchers document the outflow of funds, whether through cash or bank transfers. Conversely, receipt vouchers are utilized to document the inflow of funds, recording cash or bank receipts from sources like customer payments or interest income.

Journal vouchers, also known as transfer or non-cash vouchers, document transactions that do not involve immediate cash or bank movements. These are used for recording adjustments, accruals, depreciation, or credit sales, where the transaction impacts accounts but does not involve a direct cash exchange. Other specialized vouchers include purchase vouchers, which document the acquisition of goods or services, and sales vouchers, which record sales transactions. Contra vouchers are specifically used for internal transfers, such as moving cash between a cash account and a bank account.

The Voucher Workflow in Accounting

The voucher workflow begins with a triggering event, such as the receipt of an invoice from a vendor for goods or services. Upon receiving the invoice, the accounts payable department initiates the preparation of a voucher. This involves gathering and attaching all relevant supporting documents, including the purchase order, receiving reports, and the vendor invoice itself, to the voucher. The voucher is then meticulously verified to ensure that the details, such as quantities, prices, and terms, match across all supporting documentation.

Once prepared and verified, the voucher proceeds through an approval process, requiring signatures from authorized personnel. This multi-level approval system acts as an internal control, ensuring that all payments are appropriate and have been properly sanctioned. After approval, the voucher’s details are entered into a voucher register or directly into accounting software. This entry formally records the liability and establishes a record of the pending payment.

The voucher then serves as the basis for the actual payment, which is typically scheduled according to the vendor’s terms. Once the payment is made, the voucher is marked as “paid,” and the transaction is recorded in the general ledger, impacting the relevant asset, liability, expense, or revenue accounts. This systematic workflow provides a comprehensive audit trail, allowing businesses to track every financial transaction from its inception to its final recording, thereby maintaining financial transparency and accountability.