Journal Voucher Definition
A journal voucher, in simpler words, is a document including all the critical data of an accounting transaction.
There are a number of financial records and documents a business works with on a daily basis. Each one of them is important for smooth business transactions. As an HR manager, you should have a clear understanding of any and every financial document including a journal voucher.
If you wish to know more about journal vouchers, let’s dive in.
Here, we will discover:
Understanding Journal Voucher Meaning!
A journal voucher is a document that includes all financial transactions. It usually includes information such as the ID number of the voucher, the date, a brief of the transaction, the total transaction sum, taxes (if there are any), a reference to other evidence, the sign of the individual who made the voucher, and also the sign of the authorized individual.
Here is when a question arises– why do businesses use journal vouchers? Let’s find the answer in the next section.
Purpose of Journal Voucher
First and foremost, businesses use journal vouchers to address and resolve any wrongly recorded business transactions. Plus, they also use the document to keep a check on such transactions that do not involve any cash in the account books of the organization.
Some employers also use journal vouchers to manage transactions without any outflow. Say, for instance, writing off account balances and depreciation of tangible assets need journal vouchers.
Uses of Journal Voucher
Now that you know what is journal voucher and its the purpose, let’s understand its uses:
- As already mentioned earlier, businesses use it to manage non-cash and non-trading transactions
- The document also comes in handy to auditors as they get a clear picture of the business transactions of an organization
- Journal vouchers can also be used as proof for future reference
- It also forms the basis of rectification records.
Advantages of Journal Voucher
There are many but let’s talk about the top advantages of journal vouchers that you must be aware of:
- With journal vouchers, businesses get all their business transactions in chronological order according to their occurred time
- The document helps accountants to fix errors
- It also helps businesses manage their non-cash expenses effortlessly
- Journal voucher helps close the account books at the year-end
- It offers seamless backup for a reversal of transaction entries
- It helps businesses stay compliant along the way
Difference Between a Journal Voucher and a Journal Entry
“Journal voucher” and “Journal Entry” almost mean the same and are often used in place of each other.
However, there is a slight difference between the two. The first one is the start of a financial transaction, and the second one is the result that is written down in their books of accounts.
The journal is the main accounting book, and journal entries are written down in it. Vouchers are the records that are kept as proof of the journal entries. A journal entry is written in that notebook.
An entry in the journal can be simple (one debit and one credit) or complicated (one or more debits and/or credits). Journal vouchers, on the other hand, are not different from one another. You can get as many journal entries as you want from a single journal voucher.
Putting the entries into the right ledgers is the next step after the journal entry is finished. On the other hand, the next step of the journal voucher is to record the transaction in the system.
FAQs
1. What is an example of a voucher?
Any piece of document that supports the transaction written in books of accounts can be a voucher. Eg: an invoice, trust deed, salary and wages sheet, and any receipt.
2. How is a journal voucher different from other accounting documents?
Most of the time, a journal voucher is not a source document but rather an auxiliary document. It is made from original documents and gives more information and specifics about a deal. This voucher can be used to make a journal entry, which is a record of a financial transaction that is sent straight to the accounting system.
3. What information is typically included in a journal voucher?
A journal voucher keeps track of the events when assets are written off, depreciated, provisioned, bought or sold on credit, or adjustments are made. They are easy to find in any financial system. It is common for accountants to use journal vouchers as part of the audit process.
4. When is a journal voucher used in the accounting process?
Journal vouchers are used to make recent accounting records, changes, and corrections when there are no other ways to get them into the financial system.