Definition:- Source Document & Vouchers and Features, Advantages, Categories.

Definition:- 

            A source document is a written document which becomes the basis for recording a transaction in the books of accounts. Such a document is the proof of happening of a transaction. It shows the nature of the transaction, the amount involved in the transaction, the date and the name of the parties involved. Such written documents are called vouchers.

        Vouchers include receipts, bills, cash memos, invoices, wages bills, salaries bills, travelling allowance bills, counter foils of cheques, registration deeds, customers agreements and any other form of written proof that shows that a transaction has take place. Such documents are verifiable documents on the basis of which transactions are recorded in the books of accounts.

According to J.R. Baltiboi: 

"A voucher may be defined as documentary evidence in support of an entry appearing in the books of accounts".

According to Rolald A. Irish: 

"A voucher may be a receipt, an invoice, an agreement, written requisition slip or in short any suitable written evidence which confirms a written transaction."

Features of a voucher:

From the above definitions, it appears that a voucher has the following features:

1. A voucher is a written document.

2. It describes the transaction in details;

3. It is a documentary evidence of the happening of a transaction;

4. It supports an entry made in the books of account.

5. It substantiates the accuracy of an entry made in the books of account.

Importance/Advantages:

       A source document has the following advantages.

1. Documentary evidence : 

       A source document acts as an evidence in support of a business transaction. It authenticates that a transaction has really taken place.

2. Basis of recording internal transactions:

      Source documents are prepared and used for the purpose of recording of internal transaction such as depreciation of fixed assets, issue of materials from stores to factory. etc.

3. Origin of transaction:

    The origin of a transaction can be traced to a source document and thus it removes any doubt regarding the occurrence of a transaction.

4. Legal proof:

      It can be used in the Court of law as a legal proof about the genuineness of a transaction.

5. Basis of audit, tax assessment and insurance claim etc.

    Source documents are used as basis of vouching, calculation of tax and assessment of insurance claim.etc.

Categories of Vouchers: 

The following are the categories of Vouchers on the basis of the parties who prepare them:

1. External Supporting Vouchers:   

     External Supporting Vouchers are those vouchers which are prepared by the parties other than the parties who receive them. Example of such vouchers are Purchase Invoices received from the parties who supply the goods. Cash Memos obtained from the seller from whom goods are purchased in cash. Cash Payment Receipts for payment of expenses. Debit Note received from the supplier for return of goods by the business; Credit Note received form the customers for goods returned by them.

2. Internal Supporting Vouchers:

     Internal Supporting Vouchers are those vouchers which are prepared by the business organisation. Different source documents or vouchers necessary for recording transactions in different books are given below: