Tag: origin of transactions - source documents and preparation of vouchers

Cash vouchers are of two types viz. debit voucher and credit voucher. A debit voucher is prepared when cash payments are received whereas a credit voucher is prepared when cash payments are made. They are the documentary evidence for payment of cash or for receiving cash. 

True. Voucher is a document that acts as an evidence that the payment is made or that a particular transaction has occurred. Vouchers are made for every transactions, they are serially numbered and help to check the authenticity of a particular transaction.

Cash vouchers are of two types viz. debit voucher and credit voucher. A debit voucher is prepared when cash payments are received whereas a credit voucher is prepared when cash payments are made. They are the documentary evidence for payment of cash or for receiving cash.

False. An internal voucher is prepared by the organisation itself. They can be prepared for the organisation itself or in cases where no documentary evidence is given by the other party. Example:- Counter foils of pay in slip. An external voucher is a voucher that is prepared by the third parties. Example:- A voucher sent by a shopkeeper to the buyer for purchase of goods is an external voucher. 

An external voucher is a voucher that is prepared by the third parties. They are like bills or just like any other voucher. Example:- A voucher sent by a shopkeeper to the buyer for purchase of goods is an external voucher. 

Loss of goods by fire, it is just possible that some goods may catch fire and result in loss to the business. This is definitely loss, so "Loss of goods by fire" account will be debited. Such goods have been destroyed, not sold, so their  valuation will be made at cost price. So, purchases account will be credited. The journal entry for this transaction will be made as under:

All incidental charges incurred for installation of assets are charged to the cost of that asset. Wages paid on erection of machinery is a capital expenditure and will be debited to machinery account.

A debit balance increases the balance in an expense account and a credit balance decreases the balance. Loan account may have debit or credit balance i.e. when a business secures a loan it records it as an increases in the appropriate asset account and corresponding increases in an account called loan. 

A joint venture is an entity which is created by two or more parties to accomplish a particular project. For this a joint venture account is separately maintained. If any amount is spent for joint venture, this will be debited to joint venture account.

An accounts assigned normal balance is on the side where increases go because the increases in any account are usually greater than the decreases. Therefore, asset, expense, and owner's drawing accounts normally have debit balances. Liabilities, revenue, and owner's capital accounts normally have credit balances.