Credit Voucher Definition
A credit voucher, in simpler words, is a document that records accounting transactions. It includes monetary value such as cash payments when a payment is done.
Voucher is not an unknown document. However, do you know there are different types of vouchers you must be aware of? The credit voucher is one of them.
Let’s dive in and learn everything about vouchers, especially credit vouchers.
Here, we will discover:
What is a Voucher?
In accounting, a voucher is a valuable piece of document that can provide evidence for financial transactions.
Vouchers tell us what things were purchased or services used, from whom the service was received, and whether payment was authorized.
It is just like keeping score in a special kind of book called a ledger, where all of a company is recorded.
A voucher is an indicator that things are being done right in a business. In simpler words, it is a tool which a company can rely on to check the money is being managed properly.
There are different types of vouchers and each one of them serves a different purpose. Let’s explore them in the next section.
Types of Vouchers
Debit / Payment Voucher
A Debit or Payment Voucher is like an official receipt every time a company spends money. It notes what was bought, how much was paid, who they bought it from and why. It’s how businesses keep track of expenditures– just like a permission slip for spending. It helps organizations with cash flow management.
Credit / Receipt Voucher
A Credit or Receipt Voucher is like a receipt when a company receives money. It records every minute detail of the transaction. This voucher is essential for acknowledging income as well as maintaining a record of funds coming in. It is like a thank-you note for the money received.
Supporting Voucher
A Supporting Voucher is an additional voucher to support a detail in another voucher.
It may be an invoice, a bill or any proof of details shown on the main voucher.
This voucher makes sure that it contains and offers solid evidence and clarity of every transaction.
Non-cash Voucher
A Non-cash Voucher is one that is used when the transaction doesn’t involve any actual money transfer and includes adjustment & exchange.
It is a way to keep a record of the things that don’t affect the account of the business by means of physical money.
It helps in accurately reflecting the various non-monetary activities on the financial records.
What is a Credit Voucher?
A Credit Voucher, also known as a receipt voucher, is a legal voucher that serves as a written record of a monetary transaction. In accounting, this entity is primarily used when payments are made. It represents physical evidence for receiving cash or a check. Conclusively, it encases the money value of a transaction, providing an authoritative trail for the inflow of finances.
Types of Credit Vouchers
Bank Credit/Receipt Voucher
Cash credit vouchers such as this are those that show the cash that went directly to the bank from the party.
This ensures that a bank will properly credit what was delivered in physical currency to the correct bank account.
A bank credit voucher is merely a summarized version of a cash transaction moving into the bank.
Cash Credit/Receipt Voucher
Cash Credit or Receipt Voucher is used for all payments through a cheque or Demand Draft (DD). This type of voucher is used only in case of non-cash transactions. It clearly specifies the amount and mode of payment and helps in maintaining accurate financial records for all the transactions, whether cash or non-cash.
Details Included in Credit Voucher
A credit voucher includes the following information:
- Header Information
- Payer’s Details
- Mode of Payment
- Details of Transaction
- Information of Bank
- Signature of Authorized Person
- Additional Notes/Remarks
Why are Vouchers Important for Companies?
For organizations, vouchers are a critical component of the financial reporting process as they contain detailed information necessary for documenting the company’s expenditures and financial status.
In a nutshell, they cement the certainty and objectivity of the company’s financial statements, particularly in dealing with accrual accounting as opposed to cash accounting.
Organizational records can be distorted for various reasons such as legal suits, fraud, etc and vouchers serve as the only solid proof of the company’s transactions.
These documents validate the company’s expenses thus helping in preventing check or payment duplication.
There you go!
Hope you now have a clear understanding of vouchers as well as credit vouchers.