Financial Accounting

Prepared by Dr. Afzalur Rahman

Module 1
Chapter 4
BUSINESS TRANSACTIONS—VOUCHER PREPARATION
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Financial Accounting

CHAPTER AT GLANCE (Chapter 4)

4.01 Voucher
4.01.01 Meaning of Voucher
4.01.02 Types of Vouchers
4.02 Preparation of a Voucher

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Financial Accounting

CHAPTER AT GLANCE (Chapter 4)

4.03 Source Documents
4.03.01 Cash Memo
4.03.02 Invoice or Bill
4.03.03 Receipt
4.03.04 Pay-In-slip
4.03.05 Cheque
4.03.05 Debit Note
4.03.06 Credit Note
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Financial Accounting
4.02
VOUCHER
4.01.01 Meaning of a Voucher
 A Voucher is a document evidencing a business
transaction.
Thus,
• whenever a transaction takes place,
• an evidence to that effect is also established.
• such evidences are known as Source Documents.

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Financial Accounting
4.01
VOUCHER
4.01.02 Types of Vouchers
 Vouchers may be categorised into:
(i) Source Vouchers or Source Documents or
Supporting Vouchers and
(ii) Accounting Vouchers.

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Financial Accounting
4.01
VOUCHER
4.01.02 Types of Vouchers
(i) Source Vouchers or Source Documents or Supporting
Vouchers:
They are the vouchers or documents
• which come into existence at the time of transaction
Examples
• cash memo for cash sale,
• Invoice for credit sale,
• agreement for rent, and so on.
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Financial Accounting
4.02
VOUCHER
(ii) Accounting Vouchers:
 An accountant has supporting vouchers such as cash
payments, cash receipts, invoices, etc.
 Source vouchers are analysed to determine accounts to
be debited and credited.
 The decision is recorded on a document termed
Accounting Voucher.

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Financial Accounting
4.02
VOUCHER
 Types of Accounting Vouchers:
1. Cash Vouchers and
2. Non - Cash Vouchers or Transfer Vouchers.

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Financial Accounting
4.02
VOUCHER
1. Cash Vouchers and
• Cash Vouchers refer to the voucher prepared
• at the time of receipt or payment of cash and
• includes receipt and payment through cheques.
• Cash Vouchers can be of the following two types
(i) Credit Voucher
(ii) Debit Voucher

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Financial Accounting

Credit Voucher

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Financial Accounting

Debit Voucher

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Financial Accounting
4.02
VOUCHER
2. Non-Cash Vouchers or Transfer Vouchers
 Non-Cash Vouchers refer to vouchers prepared for
transactions not involving cash.
Examples
 Invoice or Bills, Debit and Credit Notes, etc.

A specimen of Non Cash Voucher.

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Financial Accounting

Non Cash Voucher.

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Financial Accounting

Transaction
 It is a financial happening entered into by two or more
willing parties.
 It effects a change in the asset, liability, or net worth
account.

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Financial Accounting

Transactions
 Transactions are recorded in the books of accounts
 on the basis of an source documents such as
• cash memo
• bills of purchases,
• invoices for sales,
• debit and credit notes,
• contracts , agreements etc.

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Financial Accounting

Transactions
 Accounting voucher is prepared
 on the basis of Source Documents and
 recorded in
• Journal and special purpose books
• in a chronological order
 The recorded entries are transferred to the specific Ledger
Accounts

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Financial Accounting
4.03
SOURCE DOCUMENTS

Let us now discuss the most common source documents.

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Financial Accounting
4.03
SOURCE DOCUMENTS
4.03.01 Cash Memo
 Cash Memo is prepared by the seller when he sells goods
against cash.
 It has details with respect to description of goods sold,
 quantity,
 rate of each item and
 the total amount received,
 besides the date of transaction
 and other terms and conditions, if any.
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Financial Accounting
4.03
SOURCE DOCUMENTS
4.03.01 Cash Memo
 It is an evidence for the purchaser
 for goods purchased against cash and
 for the enterprise,
 it is an evidence of sale for cash.

Picture of the Cash Memo

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Financial Accounting

Cash Memo

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Financial Accounting
4.03
SOURCE DOCUMENTS
4.03.02 Invoice or Bill
 An Invoice or Bill is prepared by the seller
 when he sells goods on credit.
 It has details with respect to the name of the party
 to whom goods are sold,
 the description of goods sold and
 the total sale amount.

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Financial Accounting

Invoice or Bill

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Financial Accounting
4.03
SOURCE DOCUMENTS
4.03.03 Receipt
 When cash or cheque is received
 a receipt is prepared and issued
 It is an acknowledgment of receipt
 The receipt is prepared in duplicate.
 Original copy is for the party tendering the payment
 Duplicate copy is kept for record.
 It is a Source Document
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Financial Accounting

Receipt

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Financial Accounting
4.03
SOURCE DOCUMENTS
4.03.04 Pay-in-Slip
 It relates to Bank Transactions
 A Pay-in-Slip is a form supplied by the bank
 To deposit cash, cheques, etc., in the Bank Account.
 It has a counterfoil
 Returned to the depositor
 With cashier’s signature, as receipt.

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Financial Accounting

Pay-in-Slip

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Financial Accounting
4.03
SOURCE DOCUMENTS
4.03.05 Cheque
 A Cheque is a document in writing
 drawn on a specified banker and
 payable on demand
 The bank supplies cheque forms
 The name of the party to whom payment is to be made
 is written after the words ‘Pay To’
 Then the amount is written—both in words and figures
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Financial Accounting

Cheque

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Financial Accounting
4.03
SOURCE DOCUMENTS
4.03.06 Debit Note
 A Debit Note is made out evidencing that
 a debit has been made to the account of the party
 named in the debit note.
A specimen of a Debit note.

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Financial Accounting

Debit note

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Financial Accounting
4.03
SOURCE DOCUMENTS
4.03.06 Debit Note
The effect of a debit note is that
• the indebtedness to the supplier is reduced or,
• if the account is already settled,
• goods can be purchased further without payment.

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Financial Accounting
4.03
SOURCE DOCUMENTS
4.03.07 Credit Note
 A Credit Note is made out evidencing that
 credit has been granted to a debtor.
Example,
• if a customer returns goods previously invoiced,
• a credit noted is issued or
• the customer is allowed further discount.

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Financial Accounting
4.03
SOURCE DOCUMENTS
4.03.07 Credit Note
 The effect of a credit note is that
 the amount of the customer’s indebtedness
 is reduced or,
 if it is already settled,
 the credit lies in his account.

A specimen of a Credit Note

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Financial Accounting

Credit Note

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Financial Accounting
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sciences-and-humanities/department-of-commerce/overview/#

Thank you

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