Difference between Source Document and Voucher
Introduction:
In accounting, accurate record-keeping is crucial for maintaining the integrity of financial transactions. Source documents and vouchers are two essential components in this process, each serving a specific role in verifying and documenting business transactions. Understanding the differences between source documents and vouchers is important for commerce students, accountants, and auditors.
What is a Source Document?
A source document is the original document that provides all the essential details about a business transaction. It includes information such as the date of the transaction, the amount involved, and the parties engaged in the transaction. Source documents serve as the foundation for recording transactions in the accounting system.
Key Features of Source Documents:
- Original Record: The first point of entry for any financial transaction.
- Details Provided: Includes crucial information such as the date, amount, and parties involved.
- Purpose: Used to prepare accounting vouchers and enter data into the accounting records.
Examples of Source Documents:
- Invoices
- Receipts
- Cash memos
- Purchase orders
What is a Voucher?
A voucher is a document that acts as proof of a business transaction. It is derived from source documents and is used primarily for audit purposes. Vouchers are essential in verifying that the transactions recorded in the financial statements are accurate and legitimate.
Key Features of Vouchers:
- Proof of Transaction: Serves as evidence that a financial transaction has occurred.
- Derived from Source Documents: Created based on the information provided in source documents.
- Purpose: Used by auditors to verify the accuracy of business transactions.
Examples of Vouchers:
- Debit notes
- Credit notes
- Payment vouchers
- Letters of credit
Key Differences Between Source Documents and Vouchers
| Aspect | Source Document | Voucher |
|---|---|---|
| Definition | Documents that contain the details of a business transaction. | Documents that act as proof of the transaction between two parties. |
| Purpose | Used to prepare accounting vouchers and record transactions in the accounting system. | Used by auditors to verify the accuracy of business transactions. |
| Examples | Invoices, receipts, cash memos, purchase orders. | Debit notes, credit notes, payment vouchers, letters of credit. |
Conclusion:
Source documents and vouchers are both critical in the accounting process, but they serve different purposes. Source documents provide the initial details of a transaction and are used to record it in the accounting system. Vouchers, on the other hand, act as proof of these transactions and are crucial for audit verification. Understanding these differences is vital for anyone involved in accounting and financial management.