What is Journal Voucher?
Journal Voucher is the supporting document that supports transactions record in the financial statement. It is mostly used for the adjusting and reversing entry. Each transaction must be supported by a hard copy as the summary of transaction. This hard copy can be a payment voucher, receipt voucher, journal voucher, and so on.
As we know that, the balance on the financial statement is the summary of many detail transaction happens in the daily business operation. Each recording represents a set of business transaction such as sell, purchase, and so on. Each recording must link to one journal voucher which is the summary of a set of documents such as invoice, receipt, contract, etc.
Payment voucher is the supporting document that is the basis of recording payment. Receipt Voucher is the supporting of revenue transaction. Journal Voucher is used as the supporting document of the adjusting and reversing entries.
Journal Voucher shows that the transaction is already review and approved by the authorized person. The process of recording must follow the approved document.
Type of Journal Voucher
The Journal Voucher is used for the following transaction:
- Adjusting Entry: The adjustment which does not fall into revenue and expense. It is not the daily business transaction, but mainly the transaction mainly for reporting purposes.
- Reversing Entry: Any transaction to reclass the error or mistake in the previous record.
- Depreciation Expense: The reclass of fixed asset to depreciation expense.
- Other transactions: any other transactions outside the normal business operation. The transactions that are not related to cash, it calls non-cash transactions.
Journal Voucher Features
Journal Voucher must include the following feature:
- Reference number: the reference number allow us to cross-check between hard copy and the detailed transaction in the general ledger
- Posting Date: must match with general ledger
- Debit and Credit Account: show the accounts that impact the transaction.
- Amount: the debit and credit amount of each account
- Description: The explanation of the background of adjustment.
- Supporting document
- Authorization
Journal Voucher Example
Download Journal Voucher Excel
Advantages of Journal Voucher
- Allow the accountant or auditor to trace back from the recording to hard copy if some wrong.
- It easy for auditors to review all adjustments as it is a significant risk for auditors.
- It is strong evidence for future review.
- The company can easily find any adjustment or high-risk transaction in sequential order.
Disadvantage of Journal Voucher
- It is very risky if management does not review journal vouchers properly.
- These transactions will require more time when the number increases significantly.
- Internal control will not work with such kind of adjustment as it depends on the management approval. Management can override the internal control by approving the Journal Voucher.