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Lesson 32

Choosing the Right Voucher Type

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Hello! Let's get started with today's lesson.

In our last session, we identified and described the six primary voucher types used in a Computerized Accounting System (CAS): Payment, Receipt, Contra, Journal, Sales, and Purchase. You learned what each voucher is for and its specific role in the accounting process.

Today, we will build directly on that knowledge. The goal of this lesson is to master the application of this knowledge by learning how to determine the correct voucher type to use for a given business transaction. This is a highly practical skill and a very common type of question in your CBSE board exam. By the end of this lesson, you should be able to look at any standard transaction and confidently decide which voucher is the right one to use.

1. A Systematic Approach to Choosing the Right Voucher

To accurately select a voucher, you need to analyze the transaction and identify the accounts involved. Think of it as a decision-making process. Here's a logical flow to follow for any given transaction:

  1. Is this a purchase or sale of goods?

    • If you are buying goods (items for resale), use a Purchase Voucher.
    • If you are selling goods, use a Sales Voucher.
    • This is your first and most important check for trading activities.

  2. If not, does the transaction involve only cash and bank accounts?

    • This includes cash deposited to the bank, cash withdrawn from the bank, or funds transferred between two bank accounts of the same company.
    • If yes, use a Contra Voucher.

  3. If not, is money (cash or bank) coming into the business?

    • Look for "Cash A/c Dr" or "Bank A/c Dr" in the journal entry. This happens when you receive payments from debtors, earn income (like commission), or secure a loan.
    • If yes, use a Receipt Voucher.

  4. If not, is money (cash or bank) going out of the business?

    • Look for "Cash A/c Cr" or "Bank A/c Cr" in the journal entry. This happens when you pay creditors, pay for expenses (like salaries or rent), or purchase an asset for cash.
    • If yes, use a Payment Voucher.

  5. If none of the above, is it a non-cash transaction?

    • These are transactions where no cash or bank account is involved. They are typically for adjustments.
    • Examples include depreciation, purchase/sale of assets on credit, writing off bad debts, or correcting errors.
    • If yes, use a Journal Voucher.

This framework covers almost every transaction you'll encounter. Now, let's see it in action.

2. Applying the Logic: Guided Examples

The best way to learn this is by working through examples. We'll use a fantastic resource that maps journal entries directly to voucher types.

Type of Accounting Vouchers or Entries in Tally

This article from Teachoo.com provides a very clear, exam-oriented breakdown of how to choose a voucher. It will be our primary guide for this section.

First, read the introduction and carefully study the table under the 'TYPE OF ENTRY' section. This table gives you the core rule for each of the six main voucher types by showing the associated journal entry structure. Focus on which account is debited or credited for each voucher type.

As you can see from the resource, the choice of voucher is directly linked to the journal entry for the transaction. Let's analyze the examples provided in the "QUESTION" section of that same teachoo.com article.

Transaction 1: Goods purchased for Rs 10,000 from A Ltd, amount paid by cheque.

This is a two-step transaction:

  1. The Purchase: Purchase A/c Dr. To A Ltd.
  2. The Payment: A Ltd. Dr. To Bank A/c
  • Analysis:
    • The first part involves the purchase of goods. Following our rules, this is recorded using a Purchase Voucher.
    • The second part is a payment being made to a supplier via bank. Since money is going out (Bank A/c is credited), this is recorded using a Payment Voucher.

Transaction 2: Stationary purchased from B Ltd Rs 2,000. Amount paid by cash.

  1. The Purchase: Stationary Expense A/c Dr. To B Ltd.
  2. The Payment: B Ltd. Dr. To Cash A/c
  • Analysis:
    • This is a crucial distinction. We purchased stationary, which is an expense, not goods for resale. Therefore, the Purchase Voucher is not appropriate here. This is a non-cash transaction initially (an expense incurred on credit). According to our rules, this is recorded using a Journal Voucher.
    • The second part is a payment of cash. Since cash is going out (Cash A/c is credited), this is a Payment Voucher.

Transaction 3: Cash withdrawn through Bank ATM.

  • The Entry: Cash A/c Dr. To Bank A/c
  • Analysis: This transaction involves only cash and bank accounts. Cash is increasing, and the bank balance is decreasing. This is a classic case for a Contra Voucher.

Transaction 4: Sales to Z Ltd Rs 50,000, amount received by cheque.

  1. The Sale: Z Ltd. Dr. To Sales A/c
  2. The Receipt: Bank A/c Dr. To Z Ltd.
  • Analysis:
    • The first part involves the sale of goods. This is recorded using a Sales Voucher.
    • The second part is money coming into the business bank account. Since the Bank A/c is debited, this is a Receipt Voucher.

Transaction 5: Cash Sales Rs 5,000.

  • The Entry: Cash A/c Dr. To Sales A/c
  • Analysis: This is an interesting case.
    • Since it involves a sale of goods, you could use a Sales Voucher.
    • Since it involves cash coming into the business, you could also use a Receipt Voucher.
    • As the teachoo.com resource mentions, it is preferable to use the Sales Voucher. This ensures the transaction appears in the Sales Register, which is important for sales analysis. In most accounting software, you can record a cash sale directly within the Sales Voucher screen.

To reinforce these concepts, let's look at another resource that provides simple, direct examples for each voucher type.

Voucher Types and Voucher Entries - College Hive

This page from College Hive offers straightforward examples for each common voucher type. It's a great way to quickly solidify the purpose of each one.

Scan through the 'Common Voucher Types' section (numbered 1 to 6). Read the one-line example for Contra, Payment, Receipt, Journal, Sales, and Purchase vouchers. Notice how each example fits perfectly into the decision-making rules we discussed.

3. Practice Exercise

Now it's your turn. Read the following transactions, and for each one, state the correct voucher type to be used. Think about the journal entry and apply our decision rules.

  1. Withdrew cash from the bank for office use.
  2. Sold old furniture for cash.
  3. Paid salary of ₹20,000 by cheque.
  4. Purchased goods on credit from M/s Sharma & Sons.
  5. Charged depreciation of ₹5,000 on machinery.
  6. Received a cheque for ₹15,000 as commission.
  7. Transferred ₹50,000 from ICICI Bank account to HDFC Bank account.

Take about 10 minutes to think through your answers.

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4. Review of Practice Exercise

Let's go over the answers.

  1. Withdrew cash from the bank for office use.

    • Answer: Contra Voucher.
    • Reasoning: The transaction is between the Cash and Bank accounts of the company (Cash A/c Dr. To Bank A/c).

  2. Sold old furniture for cash.

    • Answer: Receipt Voucher.
    • Reasoning: This is not a sale of goods, so a Sales Voucher is incorrect. It's a sale of a fixed asset. Since cash is coming into the business (Cash A/c Dr. To Furniture A/c), a Receipt Voucher is used. (Some might argue for a Journal Voucher for the asset sale itself, but since cash is involved, Receipt is the primary voucher for the inflow of funds).

  3. Paid salary of ₹20,000 by cheque.

    • Answer: Payment Voucher.
    • Reasoning: An expense is being paid, and money is going out of the business from the bank (Salary A/c Dr. To Bank A/c).

  4. Purchased goods on credit from M/s Sharma & Sons.

    • Answer: Purchase Voucher.
    • Reasoning: The transaction is a purchase of goods, the primary items the business deals in.

  5. Charged depreciation of ₹5,000 on machinery.

    • Answer: Journal Voucher.
    • Reasoning: This is a non-cash adjustment entry (Depreciation A/c Dr. To Machinery A/c). No cash or bank is involved.

  6. Received a cheque for ₹15,000 as commission.

    • Answer: Receipt Voucher.
    • Reasoning: Money is coming into the business bank account as income (Bank A/c Dr. To Commission Received A/c).

  7. Transferred ₹50,000 from ICICI Bank account to HDFC Bank account.

    • Answer: Contra Voucher.
    • Reasoning: The transaction is a transfer between two of the company's own bank accounts (HDFC Bank A/c Dr. To ICICI Bank A/c).

Conclusion

Excellent work! Today you've moved from theory to practice. You now have a reliable method for analyzing a transaction and selecting the correct accounting voucher.

Key Takeaways:

  • Voucher selection is a logical process based on the nature of the transaction.
  • The first check is always for the purchase or sale of goods (Purchase/Sales Voucher).
  • Transactions between cash and bank use a Contra Voucher.
  • For other transactions, if money comes in, it's a Receipt Voucher. If money goes out, it's a Payment Voucher.
  • Non-cash adjustments (like depreciation or credit purchase of an asset) use a Journal Voucher.

You have now completed the core topics on transaction processing. In our next and final lesson, we will address the last two outcomes of this module, which are crucial for protecting your accounting data: understanding password security and the data audit trail feature in a CAS.