Voucher, Voucher Entry and Types of Vouchers

Voucher is a fundamental document in accounting that acts as proof of a financial transaction. It records essential details such as the date, parties involved, amount, and nature of the transaction. Vouchers ensure that every transaction has valid authorization and proper documentation, which helps maintain accuracy and transparency in financial records.

In traditional accounting, vouchers are physical documents that support entries in the books of accounts, while in computerized systems like TallyPrime, vouchers are electronic input forms used to record different business transactions. When a voucher is entered in TallyPrime, it automatically updates the relevant ledgers, trial balance, and financial statements, thereby saving time and reducing manual errors.

There are several types of vouchers, such as payment vouchers, receipt vouchers, sales vouchers, purchase vouchers, contra vouchers, journal vouchers, debit notes, and credit notes. Each voucher serves a specific purpose, like recording receipts, payments, adjustments, or stock movements.

Vouchers are significant as they not only provide an audit trail but also ensure compliance with accounting standards and legal requirements. By serving as authentic evidence, vouchers play a crucial role in internal control, financial accuracy, and decision-making in business operations.

Role of Vouchers in Accounting:

• Source Document for Transactions

Vouchers serve as the primary source document for recording business transactions. They capture all key details, including date, amount, parties involved, and purpose of the transaction, ensuring nothing is overlooked. Since they validate the occurrence of a transaction, they act as the backbone of the accounting process. Without vouchers, entries in the books of accounts would lack evidence, reducing reliability and making financial data questionable for decision-making and audits.

• Ensuring Accuracy in Accounts

Vouchers help ensure accuracy in recording transactions by minimizing errors and omissions. When a voucher is prepared and cross-verified with supporting documents like invoices or receipts, it confirms the correctness of figures and details. This prevents duplication or misclassification of entries in ledgers. Accurate vouchers also facilitate proper posting in accounting software like TallyPrime, where financial statements are automatically updated. Thus, vouchers safeguard the credibility of accounts by promoting consistency and precision.

• Supporting Internal Control

Vouchers act as a critical tool of internal control in accounting. Since each voucher must be approved and authorized by designated personnel, it ensures accountability and prevents unauthorized financial activity. For example, a payment voucher requires managerial approval before disbursement, which reduces the risk of fraud or mismanagement. Vouchers also help in segregation of duties, where different individuals prepare, verify, and authorize them, thereby strengthening the overall internal control system of the organization.

• Legal and Audit Compliance

Vouchers are essential for meeting statutory and audit requirements. During an audit, vouchers provide auditors with concrete evidence of transactions recorded in the books of accounts. They help businesses comply with tax laws, corporate regulations, and accounting standards by maintaining transparency. Since vouchers record details like GST, TDS, or other statutory deductions, they ensure regulatory adherence. Without vouchers, organizations may face legal disputes, penalties, or disallowances of expenses during audits or inspections.

• Facilitating Transparency

Vouchers promote transparency in financial reporting by providing a clear and documented record of each transaction. Since they can be traced back to original supporting documents like bills, cheques, or invoices, they eliminate doubts about the authenticity of entries. Transparent voucher recording also builds stakeholder confidence, as managers, investors, and auditors can verify financial data easily. In this way, vouchers not only safeguard against disputes but also strengthen the trustworthiness of organizational accounts.

• Simplifying Audit Trails

One of the most important roles of vouchers is creating a reliable audit trail. Each voucher links transactions with relevant supporting documents, making it easier to trace financial activities step by step. This traceability helps auditors and accountants understand the origin, authorization, and posting of transactions. An organized voucher system reduces the chances of missing information during audits. It ensures accountability and provides a strong foundation for detecting fraud, discrepancies, or financial irregularities.

• Aiding Management Decisions

Vouchers provide management with authentic and organized financial information that aids decision-making. For example, purchase vouchers show the company’s spending patterns, while sales vouchers highlight revenue streams. By analyzing vouchers, managers can evaluate cash flows, identify cost-saving opportunities, and control unnecessary expenses. Vouchers also help prepare accurate financial reports, which guide strategies related to budgeting, investments, and resource allocation. Thus, vouchers indirectly influence better planning and efficient decision-making in business operations.

• Record-Keeping and Reference

Vouchers act as permanent records for future reference. They serve as documentary evidence whenever disputes arise with suppliers, customers, or employees. For instance, a payment voucher with signatures and receipts can resolve payment disputes. In computerized systems, vouchers stored digitally can be retrieved quickly for analysis. These records also help track historical financial activities, supporting comparative studies and financial planning. Overall, vouchers ensure systematic record-keeping and provide reliability to financial documentation in accounting.

Types of Vouchers:

1. Payment Voucher

A payment voucher is used to record all business payments made through cash, cheque, or bank transfer. It ensures proper tracking of outflow of funds. Examples include payment to suppliers, rent, salaries, or loan repayments. Each payment entry is supported by receipts or bills to verify the transaction. Payment vouchers help maintain cash flow records and prevent errors or duplication. In TallyPrime, users can select the “Payment Voucher” option and specify ledger accounts like “Bank” or “Cash” and corresponding expense accounts. This voucher is essential for businesses to control expenses and provide an audit trail for payments.

2. Receipt Voucher

Receipt vouchers record money received in the business, whether in cash, cheque, or bank transfers. They capture inflows from customers, loans, advances, or investments. For example, if a customer pays ₹1,00,000 for a sale, it is entered through a receipt voucher. Supporting documents like bank slips or receipts validate the entry. In TallyPrime, receipt vouchers are created by choosing “Receipt” and linking accounts such as “Bank” and “Debtors.” Proper maintenance of receipt vouchers ensures accurate cash flow tracking, reduces chances of misappropriation, and provides transparency. They help reconcile bank balances and strengthen financial reporting.

3. Contra Voucher

A contra voucher is used for transactions involving internal fund transfers within the business. It records transactions where cash is deposited into a bank account, withdrawn from a bank, or transferred between two bank accounts. For instance, depositing ₹20,000 cash into the company’s bank is a contra entry. Since both debit and credit are internal accounts, there is no impact on external parties. Contra vouchers are crucial for maintaining accurate cash and bank balances. In TallyPrime, users can select the “Contra” voucher and update ledger accounts like “Cash” and “Bank.” This prevents confusion and maintains internal financial clarity.

4. Journal Voucher

Journal vouchers are used for adjustments, provisions, and non-cash transactions. They include entries such as depreciation, outstanding expenses, prepaid expenses, or accruals. For example, recording depreciation of ₹10,000 at year-end is done using a journal voucher. These vouchers do not involve immediate cash or bank movement but are vital for proper financial statements. In TallyPrime, the “Journal” voucher option is used where debit and credit accounts are specified. Journal vouchers ensure compliance with accounting standards and accurate reflection of business performance. They help in fair reporting by adjusting books for non-cash and period-end entries.

5. Sales Voucher

Sales vouchers record the sales of goods or services, either on cash or credit. They serve as proof of revenue earned by the business. For instance, selling products worth ₹80,000 to a customer is entered through a sales voucher. Supporting documents like invoices or bills are attached. In TallyPrime, users select the “Sales” voucher, where customer and sales ledger accounts are updated along with inventory items. Sales vouchers are important as they maintain revenue records, track customer transactions, and calculate GST or other applicable taxes. They also help generate accurate profit and loss statements for business analysis.

6. Purchase Voucher

Purchase vouchers record all purchases made by the business, whether raw materials, goods, or services. They can be cash or credit purchases. For example, buying raw materials worth ₹60,000 is entered through a purchase voucher. Supporting invoices or supplier bills are attached for verification. In TallyPrime, “Purchase Voucher” is used where supplier accounts and purchase ledgers are debited and cash/bank accounts credited. Purchase vouchers help track expenses, manage supplier payments, and calculate input GST. Maintaining accurate purchase vouchers also aids in inventory management, cost analysis, and ensures transparency in the procurement process.

7. Debit Note Voucher

A debit note voucher is used when goods purchased are returned to the supplier due to defects, excess supply, or mismatches. For instance, if goods worth ₹10,000 are returned, a debit note voucher records the reduction in purchase and liability. It reflects that the supplier’s account is debited. In TallyPrime, users select “Debit Note” and update supplier and purchase accounts. Debit note vouchers help businesses manage returns effectively, adjust inventory, and claim input tax credit adjustments. They also serve as formal communication to suppliers about reduced obligations, ensuring accurate financial and vendor records.

8. Credit Note Voucher

Credit note vouchers are used when customers return goods due to damage, defects, or other reasons. For example, if a customer returns products worth ₹8,000, a credit note voucher is created to adjust sales and reduce receivables. In TallyPrime, “Credit Note” is used to update customer accounts and sales ledger. These vouchers maintain accurate sales records, adjust taxes, and handle inventory corrections. Credit notes also serve as formal communication to customers acknowledging their returns. They ensure transparency, customer satisfaction, and accurate revenue reporting by reducing overstated sales figures in financial statements.

9. Memo Voucher

A memo voucher is a temporary or non-accounting voucher used for recording transactions that are provisional in nature. These entries do not affect accounts until converted into regular vouchers. For example, recording pending expenses, such as a possible electricity bill of ₹5,000 not yet received, can be done using a memo voucher. In TallyPrime, memo vouchers can later be converted to actual vouchers when confirmed. They help businesses make provisional entries, track pending obligations, and avoid missing transactions. Memo vouchers ensure flexibility in accounting while maintaining control over uncertain or temporary entries.

10. Reversing Journal Voucher

A reversing journal voucher is used to record period-end adjustments that are automatically reversed at the start of the next accounting period. For example, accrued salaries for December may be recorded as an expense and then reversed in January once actual payment is made. In TallyPrime, users can select “Reversing Journal” to create such entries. This prevents duplication of expenses and maintains accuracy in financial statements. Reversing journal vouchers are essential for businesses to manage accrual accounting, handle temporary adjustments, and ensure smooth financial closing without affecting subsequent accounting periods.

Tabular summary of Voucher Types in TallyPrimewith their purpose and usage: