Chapter 23
The Voucher System
Chapter Overview
This chapter discusses the need by some businesses to maintain control over the activities of companies as
they grow larger and the number of transactions increases. The company develops rules and procedures to
ensure that the money is being spent in approved ways. These rules and procedures are called internal
Learning Objectives
After studying Chapter 23, your students should gain proficiency in the following:
2. Explain Purchases Returns and Allowance, Partial Payments, and Recording Purchases at Net or Gross
in a Voucher System.
Chapter 23 Assignment Grid
Estimated Level
Learning Time in of
Assignment Topic(s) Objective(s) Minutes Difficulty
Discussion Questions and Critical Thinking/Ethical Case
1 Voucher System 1 5 Easy
2 Voucher System 1 5 Easy
3 Voucher System 1 5 Easy
4 Voucher System 1 5 Easy
Concept Checks
1 Journal Entries to Record and Pay Vouchers 1 10 Easy
2 Petty Cash 1 10 Easy
Exercises (Set A)
23A-1 Journal Entries to Record and Pay Vouchers 1 30 Medium
23A-2 Petty Cash 1 35 Medium
Exercises (Set B)
23B-1 Journal Entries to Record and Pay Vouchers 1 30 Medium
23B-2 Petty Cash 1 35 Medium
Problems (Set A)
23A-1 Journal Entries to Record and Pay Vouchers 1 30 Medium
Problems (Set B)
23B-1 Journal Entries to Record and Pay Vouchers 1 30 Medium
Financial Report Problem
Reading Amazon’s Annual Report 1 20 Easy
Chapter Introduction Summary: A voucher is a written authorization form that is used for every cash
payment the company makes. It contains all the details of the transaction in question along with the
signatures of appropriate employees as authorization. A voucher system, then, is a system in which no
payment is made without an approved voucher. This is system used to implement this internal controls.
1. The steps included in a voucher system are:
a. Preparing a purchase requisition and getting it authorized.
b. Preparing a purchase order with details such as company, number of items, and so forth, and
getting it authorized.
c. The company receiving the purchase order preparing a sales invoice specifying number, type
2. Characteristics of a voucher system.
a. Separation of duties – no one person in a company is in control of all transactions. The
person who approves the purchase and payment is not the same person in charge of the
Learning Unit 23-1: Handling Transactions in a Voucher System
Summary: A voucher system controls all cash payments, except payments out of the petty cash fund.
Company rules state that all invoices must be compared with purchase requisitions, purchase orders, and
receiving reports before payment; and that all payments must, of course, be supported by appropriate
documents and authorizations. A voucher is a written authorization form that is used for every cash payment
the company makes. It contains all the details of the transaction in question along with the signatures of
Key Concepts: Voucher, voucher system, voucher register, vouchers payable, unpaid voucher file (tickler
file), check register, paid voucher file.
Lecture Outline:
A voucher system is made up of the following elements: Vouchers, voucher register, unpaid voucher file,
check register and paid voucher file. The elements details are:
1. The Voucher (Figure 23.3):
a. In preparing the voucher, the accountant responsible for vouchers compares the invoice (Figure
23.2) with the purchase requisition, purchase order (Figure 23.1), and receiving report.
b. The original supporting documents are attached to the voucher.
c. The voucher format:
i. The front contains the voucher number, invoice number and date, purchase order
2. The Voucher Register (Figure 23.4) – a special journal replacing the purchases journal:
a. The vouchers are entered in the voucher register in numerical order at the time the liability is
incurred.
b. The vouchers payable credit column records the amount due on each voucher (before any
3. Unpaid Voucher File (tickler file) is:
4. Check Register (Figure 23.5) – journal that replaces cash payment journal in recording payments of
vouchers:
a. The columns of the check register record the
i. Date
ii. Check number
iii. Payable to
b. Posting of the check register follows the same rules as other special journals.
c. Once the voucher has been paid, it should be marked paid to avoid duplication.
5. Paid Voucher File:
a. Records all vouchers paid
b. Filed either in sequential order by voucher number or alphabetically based on the creditor’s
name.
Teaching Tips/Strategy: Students are not familiar with a voucher system. Describe the use and purpose of
the voucher process and how the voucher system helps the organization implement internal control
Use the “10–minute Quiz” questions #1 – #7 to reinforce the learning concepts.
Learning Unit 23-2: Purchases Returns and Allowances, Partial
Payments, and Recording Purchases at Net or Gross in a Voucher
System
Summary: Normally invoices are recorded at gross amount (full amount) on the purchases. Another method
of recording purchases is to record at net (amount with discount applied). When a discount is missed using
the net approach, a title called Discount Lost is shown in the payment column of the check register.
Key Concepts: None
Lecture Outline:
1. Situation 1: Purchase returns and allowances after the voucher has been recorded (See Figure 23.6)
There are two ways to handle this type of transaction
b. Method 2:
i. Modify the original voucher,
ii. Make a correcting entry in the general journal.
2. Situation 2: Partial payments planned after voucher prepared for full payment (See Figure 23.7)
a. Original voucher is canceled.
3. Recording purchases at net amount
a. Assume the discount will be taken and record the purchases at the amount net of the discount.
b. A discount missed is called discount lost and shown as a debit in the check register.
c. Example: Mill company buys merchandise on account for $8,000 with terms 2/10, n/30.
The net method (8,000 less a 2 % discount or 98% of the full price)
4. Recording purchases at gross amount
a. Assume the discount will NOT be taken, and record the purchases at the full amount.
b. Example: Mill company buys merchandise on account for $8,000 with terms 2/10, n/30.
The gross method:
Dr. Purchases 8,000
Cr. Vouchers Payable 8,000
Teaching Tips/Strategy: Distinguish between the gross and the net method of recording purchases and
invoices. Concept Check #5 is excellent for classroom practice, and Exercises 23A-5 and 23B-5 aid in
calculating the required amount and recording the necessary journal entries.
Use the “Ten-Minute Quiz” questions #8 – #10 to reinforce the learning concepts.
Name Date Section
CHAPTER 23
TEN-MINUTE QUIZ
Circle the letter of the best response.
1. The purpose of the voucher system is to:
a. ensure that all cash disbursements are properly approved and recorded
b. ensure that all cash receipts are properly recorded
c. ensure that the company’s cash is spent in approved ways
d. ensure that all cash receipts are deposited in the bank
2. Which of the following is not a characteristic of the voucher system?
a. the manager approves the purchase and signs the check
b. the manager does not make purchases without approved vouchers
c. the manager only uses numbered documents
d. the manager cross-references documents for support
3. What is the proper sequence for preparing these documents in a voucher system?
A – receipt of invoice
B – purchase order
C – purchase requisition
D – receiving report
E – voucher approval and payment
a. B, C, A, D, E
b. C, B, A, D, E
c. B, A, C, D, E
d. C, A, B, D, E
4. The voucher is recorded in a special journal called:
a. vouchers payable
b. accounts payable
c. voucher register
d. voucher subsidiary ledger
5. The unpaid voucher file is also called the:
a. accounts payable file
b. tickler file
c. check register
d. voucher register
6. The check register shows the entry:
a. Vouchers Payable XX
Purchases Discount XX
Cash XX
b. Cash XX
Purchase Discount XX
Vouchers Payable XX
c. Vouchers Payable XX
Purchases XX
d. Purchase Discount XX
Vouchers Payable XX
7. A characteristic of the voucher system is the requirement that:
a. vouchers be paid immediately after preparation
b. the voucher lists the account distribution
c. a separate voucher be prepared for each expenditure
d. vouchers be prepared by the requesting department
8. A company purchased $2,500 of merchandise with terms 2/10, n/20. The company uses the net
method and records the purchase:
a. Purchases 2,450
Vouchers Payable 2,450
b. Purchases 2,500
Vouchers Payable 2,500
c. Vouchers Payable 2,500
Purchases 2,500
d. Vouchers Payable 2,450
Purchases 2,450
9. A company purchased $2,500 of merchandise with terms 2/10, n/20. The company uses the net
method and records the payment within the discount period as:
a. Cash 2,450
Vouchers Payable 2,450
b. Vouchers Payable 2,450
Purchase Discount 50
Cash 2,500
c. Vouchers Payable 2,500
Purchase Discount 50
Cash 2,450
d. Vouchers Payable 2,450
Cash 2,450
10. A company purchased $2,500 of merchandise with terms 2/10, n/20. The company uses the net
method and records the payment AFTER the discount period as:
a. Cash 2,450
Vouchers Payable 2,450
b. Vouchers Payable 2,450
Discount Lost 50
Cash 2,500
c. Vouchers Payable 2,500
Discount Lost 50
Cash 2,450
d. Vouchers Payable 2,450
Cash 2,500
Answer Key to Chapter 23 Quiz
1. a