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What is a Voucher Entry in Accounting?

Instructor: Ryan Morales
Read on to learn more about the voucher and voucher entry in accounting, how a voucher system works and the benefits of having a voucher system in the organization.

Suppose you manage your own small business and your company makes quite a number of payments every period to the company's suppliers and service providers. How do you think you might effectively monitor, control and record your company payments?

Luckily, there is a system that can help you called the voucher system in accounting.

Voucher Defined

A voucher is a pre-numbered document used in processing payments. This document is typically prepared by the accounts payable department after receiving the supplier's invoice. In the process, the supplier's invoice is matched with the related purchase order and receiving report to ensure that only goods received and services rendered to the company will be processed for payment. Matching these three documents prevents the company from paying incorrect and sometimes fraudulent invoices.

A voucher can be electronic, but most often, it is a manual, paper document.

The Voucher System

It is important to note that the voucher system is not only used to process payments but also for goods and services. A voucher is prepared every time the company makes a payment. Hence, vouchers are prepared for other disbursement transactions like cash purchases, payment of payroll, replenishment of petty cash and other funds, payment of debts and other obligations, and even payment of dividends.

What's in a Voucher?

The detailed information contained in a voucher includes the payee's or vendor's name, the invoice date, the monetary amount and the due date of payment, details of the transaction, the accounts or account codes to be debited and credited in the accounting books, and other relevant information. The voucher is also serially numbered to facilitate control.

Upon verification, the voucher is submitted to an authorized official for approval. Once approved, the voucher is recorded in the voucher register. The voucher register takes the place of the purchases journal. The journal entry in the voucher register often includes a debit to an asset and an expense or purchases account, with a corresponding credit to vouchers payable or accounts payable.

Unpaid Vouchers

Unpaid vouchers are then filed in the unpaid vouchers file, together with the supporting documents--purchase order, supplier's invoice, etc. The total of unpaid vouchers in the unpaid vouchers file actually represents the balance of vouchers payable or accounts payable in your balance sheet.

Disbursement Checks

Once the due date comes near, a disbursement check is prepared by an authorized personnel. This check is then recorded in the check register. The check register records all check disbursements of the entity and takes the place of the cash disbursement journal. The journal entry in the check register often includes a debit to vouchers payable or accounts payable and credit to cash. The payment is also recorded in the voucher register by entering the check number and the payment date.

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