The voucher system control:
A-is a set of procedures and approvals designed tp control cash reciepts and the acceptance of liabilities.
B-establishes procedures for verifying, approving and recording liabilities for eventual cash payment
C-establishes procedures for recieving checks for the sale of Verified, approved, and recorded activities
D-applies only when multiple purchases are made from the same supplier
The correct answer and explanation is:
The correct answer is B: establishes procedures for verifying, approving, and recording liabilities for eventual cash payment.
The voucher system control is a critical process used by organizations to ensure proper documentation and approval of financial transactions, particularly when dealing with liabilities. This system helps to manage and verify expenses before any payments are made, thus preventing fraud or errors. Under this system, each liability (such as an invoice or bill) must go through several stages before cash payment is authorized.
First, the liability is verified. This includes checking that the goods or services were received as expected, in the correct quantity and quality. Once verified, the liability is approved. Approval typically involves confirming that the expense is valid, necessary, and within budget constraints. After approval, the liability is recorded in the accounting system to ensure that it is properly tracked and categorized for future payments.
Once the liability is recorded, the payment process can begin. The voucher system is designed to ensure that all liabilities are fully verified and documented before payments are made, reducing the risk of errors and fraud in the payment process. This system also provides a trail of documentation that can be audited later, which adds to the accountability and transparency of financial operations within an organization.
The voucher system is used widely in both private and public organizations to maintain control over cash flows and to ensure that payments are only made for legitimate and approved expenses. It is particularly useful when multiple parties are involved in a transaction or when the same supplier is frequently used. However, it applies broadly to any situation involving liabilities, not just multiple purchases from the same supplier.