What is Recording of Transaction in accounts?
We will discuss the transaction of involvement in recording & preparing the source documents. Which are successively recorded within the basic book of original entry called Journal and are posted to individual accounts within the principal book called Ledger. Now we’ll discuss each transaction involved within the accounting process. There are under following:-
Business transactions are exchanges of economic consideration between parties and have two-fold effects that are recorded in a minimum of two accounts. Its are usually evidenced by appropriate documents like Cash memo, Invoice, Sales bill, Pay-in-slip, Cheque, Salary slip, etc. for example, The Brother buy a computer in cash Rs. 25000 to her sister. The purchase of a computer for cash is an example of a transaction, Which involves reciprocal exchange of two things: (i) Payment of money (ii) Delivery of computer. Hence the transaction involves this aspect i.e. Give and Take. Payment of money involves give aspect and delivery of computer may be a take aspect.
Source of Document
A document that gives evidence of the transactions is named the Source Document or a Voucher. The voucher shows the required details and got approved by the acceptable authority within the firm. The documents (vouchers) are arranged in chronological order and are serially numbered and kept in a separate file. All recording in books of account is done based on vouchers.
Accounting vouchers may be classified as cash vouchers, debit Vouchers, credit vouchers, journal vouchers, etc. Nowadays, accounting is computerized and therefore the necessary accounting vouchers showing the code number and name of the accounts to be debited and credited are prepared for the required recording of transactions. A transaction with one debit and one credit could also be an easy transaction and thus the accounting vouchers prepared for such transaction is known as Transaction Voucher.
A voucher that records a transaction that entails multiple debits/credits and one credit/debit is named a compound voucher. The compound voucher may be: De(a) Debit Voucher or (b) Credit Voucher;
To distinguish several vouchers, extraordinary color papers and different fonts of printing are used. An accounting voucher must contain the following essential elements :
- It is written on good quality paper.
- The name of the firm must be printed on the top.
- The date of the transaction is filled up against the date and not the date of recording of a transaction is to be mentioned.
- The number of the voucher is to be in a serial order.
- The name of the account to be debited or credited is mentioned.
- Debit and the credit amount are to be written in figures against the amount.
- Description of the transaction is to be given account wisely.
- The person who prepares the voucher must mention his name along with the signature.
- The name and signature of the authorized person are mentioned on the voucher.