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 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.
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.
Accounting for Petty Cash Vouchers
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.
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- Throughout the month, several payments are made from the petty cash account of the Galaxy’s Best Yogurt.
- Governments may also issue vouchers redeemable for various programs such as for school choice, housing, or social welfare initiatives.
- In all cases, the amount of the purchase using petty cash would be considered to not be material in nature.
- 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 total amount of purchases from the receipts ($45), plus the remaining cash in the box should total $75. As the receipts are reviewed, the box must be replenished for what was spent during the month. The journal entry to replenish the petty cash account will be as follows. As file w2 online this petty cash fund is established, the account titled “Petty Cash” is created; this is an asset on the balance sheet of many small businesses.
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.
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 to post the transaction. The company’s vouchers serve as a key source of evidence when an audit is performed.
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Cash versus Debit Card
Vouchers in different terminology are redeemable for government programs as well as for benefits provided to customers from businesses. The receipt of payment and the date are recorded to show that the voucher has been paid. Accounts payable will reflect the lower balance due to the invoice being paid, assuming there are no additional payables generated. Every company prepares such accounting vouchers as they are extremely important for a business to track down its income and expenses and ensure compliance with statutory requirements. Entries are needed to (1) establish the fund, (2) increase or decrease the balance of the fund (replenish the fund as cash is used), and (3) adjust for overages and shortages of cash.
What is Voucher? What are the types of vouchers?
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.
At the beginning of an accounting period, there should be a certain amount of cash in the box and no vouchers (which should have been removed as part of the month-end entry for the preceding month). Then, as cash is disbursed from the petty cash box, the vouchers are essentially swapped for cash. Thus, at the end of the month, the total amount in the petty cash box should still equal the balance at the beginning of the month – except that now the total is comprised of both cash and vouchers. If there is a difference between the beginning and ending figures, then it is likely that cash was removed without any voucher documentation, or else that the amount on a voucher was incorrectly stated. A petty cash voucher is usually a small form that is used to document a disbursement (payment) from a petty cash fund.
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.