Some petty cash vouchers are prenumbered and sometimes a number is assigned for reference and control. Receipts or other documentation justifying the disbursement should be attached to the petty cash voucher. They serve as a key source of evidence as they document that the goods and services posted to the financial statements truly exist. They also corroborate the firm’s cash payments to outside parties, such as vendors.
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Occasionally, errors may occur that affect the balance of the petty cash account. This may be the result of an employee not getting a receipt or getting back incorrect change from the store where the purchase was made. In this case, an expense is created that creates a cash overage or shortage.
B. Non-Cash Vouchers
One way to control cash is for an organization to require that all payments be made by check. However, there are situations in which it is not practical to use a check. For example, imagine that the Galaxy’s Best Yogurt runs out of milk one evening. It is not possible to operate without milk, and the normal shipment does not come from the supplier for another 48 hours. To maintain operations, it becomes necessary to go to the grocery store across the street and purchase three gallons of milk.
The petty cash custodian uses the cash voucher to reconcile the petty cash fund. By adding together all on-hand cash with the amounts stated on the cash vouchers, the total should equal the designated cash total for the petty cash fund. If there is a difference, then either the cash was counted incorrectly, the amounts stated on the cash vouchers are incorrect, or cash stolen from the fund. Cash Vouchers basically refer to vouchers that incorporate all the cash transactions that are cash receipts and payments. Under the category of Cash vouchers, there can be two types of vouchers; Debit Vouchers and Credit Vouchers. In all cases, the amount of the purchase using petty cash would be considered to not be material in nature.
Every voucher indicates the accounts that are required to be credited or debited. Vouchers are usually sanctioned by the accounts payable department to authorize the payments. For every voucher, there is a certain serial number written on what is a recovery rebate tax credit it and its related source document is tied up to the particular voucher. The main reason to assign a serial number to every voucher is to make it easy for the auditors to file and vouch them. Like source documents, vouchers add to the documentary evidence of business transactions.
The restaurant, for example, can debit the meat inventory account and credit the cash account to record the payment. Companies have various short-term financial obligations to suppliers and vendors throughout an accounting period. A company might need to buy inventory or raw materials from suppliers that are used in the production of the company’s goods. The suppliers essentially grant an extension of credit to the company allowing for payment to be made in the near future such as 30, 60, or 90 days. Vouchers also justify the firm’s cash payments to vendors and document the general ledger accounts used revenue streams in the business model to post the transaction. The company’s vouchers serve as a key source of evidence when an audit is performed.
A voucher may also refer to a document, such as a coupon or ticket, that is redeemable for some good or service. For instance, airlines, hotels, and restaurants may issue vouchers that can be exchanged for rooms, flights, or fares. Yes, such examples will contain fields like company name; number assigned to ticket issued; recipient’s name; amount involved; reason for money exchange plus signature required for verification purposes. A school voucher gives eligible families the right to choose a private or charter school, using a portion of state funding otherwise set aside for public schools.
- It is used by an organization to keep records of small amounts of money that it spends as well as reimbursed expenditures.
- A Voucher is an initial recording document of purchase, sales, receipt, or payment.
- At all times, the balance in the petty cash box should be equal to the cash in the box plus the receipts showing purchases.
- In this case, the expense balance decreases, and the year-end balance is the net balance from all overages and shortages during the year.
What is a Cash Voucher? Format & Example
When the petty cash fund is replenished, the completed petty cash vouchers provide the documentation for the replenishment check. A voucher typically includes all of the supporting documents showing the money owed and any payments made for an outstanding payable. The forms may also be prenumbered, in order to ensure that all forms have been accounted for. If they are prenumbered, then a common control is to track these numbers, to ensure that no vouchers were used but not stored in the petty cash box.
Once the voucher has been paid, the proof of payment is included in the voucher and recorded as a paid voucher. A voucher is a form that includes all of the supporting documents showing the money owed and any payments to a supplier or vendor for an outstanding payable. The voucher and the necessary documents are recorded in the voucher register. The voucher is important because it’s an internal accounting control mechanism that ensures that every payment is properly authorized and that the goods or services purchased are actually received.
The Housing Choice Voucher Program, also known as Section 8 housing, is a federal program that helps low-income or disabled families obtain affordable private housing. Eligible families can use their vouchers toward any sort of home and are not limited to subsidized housing projects or apartment units. A local restaurant orders meat and fish every few days from its vendors. The restaurant manager fills out a purchase order for 30 pounds of meat, and the owner initials the purchase order to approve the shipment. Using a voucher system also reduces the risk of employees colluding to steal company assets. Businesses employ segregation of duties to prevent employee theft, which means that critical tasks are assigned to different people within the organization.
Accounting Voucher: Format & Types of Vouchers
A voucher is a document used by a company’s accounts payable department to gather and file all of the supporting documents needed to approve the payment of a liability. Governments may also issue vouchers redeemable for various programs such as for school choice, housing, or social welfare initiatives. When there is a shortage of cash, we record the shortage as a “debit” and this has the same effect as an expense. If we have an overage of cash, we record the overage as a credit, and this has the same impact as if we are recording revenue. If there were cash overage, the petty cash account would be debited and the cash over and short account would be credited. In this case, the expense balance decreases, and the year-end balance is the net balance from all overages and shortages during the year.
Ariel Courage is an experienced editor, researcher, and former fact-checker. She has performed editing and fact-checking work for several leading finance publications, including The Motley Fool and Passport to Wall Street. Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master’s in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology.
