Vouching

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Learning Objectives

• To Make them learn the students about objectives of vouching

• To Learn the Students about the procedure of vouching.

Meaning of Vouching

• Vouching means the act of examining vouchers i.e documentary evidences in support of a transaction.It is used to ensure that various transactions for the period are fairly and truly recorded in the books of account.

• A Voucher is a documentary evidence in support of a transaction in the books of accounts. the act of establishing the accuracy and authenticity of entries in the accounts books is called vouching.

• oucher is known as the evident for the support of a transaction in the books of account. It may be bill, receipts, requisition form, agreement, decision, bank paying slip etc.

• The act of examining documentary evidence in order to ascertain the accuracy of entries in the account books is called "Vouching". Vouching is a technical term which refers to the inspection by the auditor of documentary evidence supporting and substantiating a transaction. Simply stated, vouching means a careful examination of all original evidence i.e invoices, statements, receipts, correspondence, minutes and contracts etc. with a view to ascertain the accuracy of the entries in the books of accounts and also to find out, as far as possible, that no entries have been omitted in the books of accounts. Therefore, vouching is the act of testing the truth of entries appearing in the primary books of accounts. It is initial for auditing.

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• definitions•  • according to R.B.Bose. “By vouching is meant the verification of

the authority and authenticity of transactions as recorded in the books of accounts”

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• “vouching is a technical term which refers to the inspection by the auditor of documentary evidence supporting and substantiating a transaction. Vouching is considered as the essence of auditing and therefore the auditor should be very careful while vouching.

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• Prerequisites for vouching•  • All the vouchers are consecutively numbered and filed in order

of the entries. •  

• He should pay attention to dates, which must correspond with the cash book, name of the party and the amount.

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• The voucher inspected should be cancelled by a stamp. •  

• Special attention should be paid to those vouchers which are in the personal name of the partners, directors, managers etc.,

• He should see that every voucher is passed as in order by a responsible officer. •  

• The signature of the officer should be noted. If the receipts is a printed one or it bears a rubber stamp of the name of the firm it should be taken as a genuine one.

• He should also find out the nature of payment •  

• He should see as to which account the payment is posted revenue or capital. •  

• Attention to be paid to the amount both in words and figures. •  

• If duplicate voucher for a missing one is produced it should be properly scrutinized to avoids any fraud.

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• While examining the vouchers for insurance, rent rates and taxes, etc the audit clerk should note the period for which the payment has been made.

• Routine checking and vouching

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• Routine checking includes checking of casts, postings, carry-forwards and other calculations in the books of original entry.

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• The auditor uses distinct tick in routine checking and tries to establish genuineness of records

• Vouching includes routine checking and it is a part of it. Both are important in their own way.

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• Vouching is the checking of entries while routine checking is the checking of casting and postings. Hence there is nothing to distinguish one form the other.

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• However in routine checking, arithmetical accuracy of the entries is to be verified and in vouching, entries are to be checked with the help of documentary evidence

• Objectives Of Vouching• Main objective of vouching is to find out the

regularity or irregularity of transactions, frauds and errors. Regularity means maintaining record and performing the work compliance with the rules, regulation and law. But irregularity means doing the work crossing to the line of rules, regulation and laws. Some of the major objectives of vouching are given below:

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• 1. To Detect Errors And Frauds• All transactions are to be supported by evidence. Each document should be

proved• by authorized authority. With the help of vouching we can detect errors and

frauds by verifying each transaction. Planned fraud can be detected through vouching.

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• 2. To Know The Truth Of Account• Each and every transaction is checked and ratified on the basis of support

document. So, we can easily know the truth of account.•

• 3. To Find The Unrecorded Transactions• Each and every transaction is checked and ratified on the basis of

document. Vouching helps to find out the unrecorded or missing transactions. If any voucher is found unrecorded, auditor can suggest to record such transactions.

• 4. To Know That All The Transactions Are Authorized• If the transactions are made on the consent of concerned authority,

such transactions are known as authorized transactions. If transactions are not authorized, such transactions can be fictitious transactions. So, such fictitious transactions ca be found with the help of vouching.

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• 5. To Know That Only The Business Transactions Are Recorded

• Sometimes, transactions are performed for individual purpose but payment is made out of business. Such transactions should not be recorded in account of business. If such transactions are recorded, we can find it with the help of vouching. To know the real profit or loss of business, such transactions are to be separated.

• To ensure that transactions recorded in the books of accounts are valid and correctly recorded.

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• To ensure that all entries made in the books are supported by documentary evidence.

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• To confirm that all transactions concerned with business are recorded and no transaction pertaining to business is left unrecorded.

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• To insure that transactions not pertaining to business have not been recorded

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• Detection of frauds and errors of principle as well as clerical errors.

Points to be considered while examining vouchers

• Vouchers is properly dated.

• It is in client’s name.

• It is duly authorised.

• Voucher is complete in all respects.

• It shows nature and amount of receipt and payments.

• After examination ,voucher should be stamped.

• Importance of vouching•  • It is a sort of preliminary work which forms an important part of audit work. •  

• Since accounts of a business firm begin with the passing of entries it becomes a basis for further scrutiny to be made at a later stage.

• The fulfills the purpose of checking entries. •  

• The auditor after satisfying himself can say that the books of accounts are correct and the balance sheet and profit and loss account exhibit the true and correct state of the financial position.

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• Vouching is said to be the backbone of auditing. •

• Types of voucher•  • Primary: a written evidence in original is said to be the

primary voucher. •  

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• Collateral: when the original voucher is not available, copies thereof are produced in support or subsidiary evidence is made available so as to remove suspicions and to satisfy the auditor.

• Examples of voucher

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• Cash receipts: carbon copies of receipts, contracts, minutes, correspondence.

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• Cash payment: invoice, bill wage sheet, salary register, contracts, correspondence.

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• Purchases-invoice, goods inward book, copies of order received, correspondence atc.

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• Sales: copies of invoice , order received, goods outward book.

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• Vouching of cash book•  • Cash book is a very important financial book for a business concern. •  

• Mostly errors and frauds arise in connection with receipts and payments of cash by making its misappropriation, wherever possible.

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• The auditor should ensure that no receipt or payment of cash is unrecorded in the cash book and no fictitious payment has been entered in it.

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• In vouching cash books, the checking of cash receipts is more difficult than cash payments;

• Vouching of cash receipts

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• Internal check

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• Comparison of the rough cash book with the cash book.

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• Control over the use of receipt book

• All receipts are on printed forms. •  

• Counterfoil receipts are used for cash receipts or a system of carbon copies of receipt is in use

• All receipts and receipts books should be separately and consecutively numbered. • The particulars as regards date, amount, name etc., •  

• If there are certain entries in the cash book for which receipts have not been issued, they should be carefully checked.

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• Along with cash receipts, the rules for granting discount should be examined. • The receipts have to be signed by a responsible person. •  

• The used receipt books should be kept in safe custody •  

• If there is a system under which a receipt accompanies the receipt of cash, such a receipt should be properly signed before its return to the customer.

•  • The method of depositing daily receipts into the bank should be examined.

• Teeming and lading method of fraud•  • Common method of committing fraud with respect to receipt of

cash from debtors is known as teeming and lading or lapping. •  

• Lapping refers to hiding of shortage by delaying the recording of cash receipts.

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• When cash is received from customers, a cash memo is issued and counterfoil of such a cash memo is retained as documentary evidence. If the payment is received in the form of cheque, pass book record can be verified by the auditor.

• Teeming and lading refers to postponing of entries to be made in the cash book.

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• Under this method whenever cash is received from the customer it is not recorded and when the amount is received from another customer entry is made in the name of first customer. This process continues and later on the cashier replaces the money he had used without any authority and credits the account of that debtor whose account had not been credited so far.

• How an auditor should identify teeming and lading?•  • After evaluating the internal check system the auditor should

vouch the cash received from debtors on the following grounds: •  

– Auditor should verify amount received from debtors from the carbon copies of receipts issued to debtors and all receipts should be serially numbered.

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– Auditor should see details of cash and cheque deposited to the bank.

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• He should advice the cashier to enter the amount received on the day of the receipt itself in the rough cash book

• Auditor should compare the entries in the cash book with rough cash book entries.

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• He should enquire about the rate of discount allowed to debtors and also ensure that discount allowed to the customers duly authorised by a responsible official.

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• Auditors should check the debtors schedule to establish the genuiness or validity of a particular transaction.

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• Auditor should ask for a certificate from a responsible official with reference to the bad debts.

Audit of Cash Transactions

• Review the I.C System

• Ensure correctness of book keeping records.

• Observance of Accounting Principles

• Evidence of Transaction

• Validity of Transactions

• Disclosure in Final accunts.

Casting or Totalling

• Totals of cash book and ledgers should be checked.

• Detect frauds done by over totalling/Under totalling

• Special attention should be given to erased/altered figures.

Bank Reconciliation Statements

• BRS is prepared by client staff at periodical work.

• Auditor should keep a record of it in his working paper file.

• Special attention should be given to Year end transactions.

• Genuineness of Items

Objectives of Vouching

• To Detect Errors and Frauds• To Know the Truth of account• To find the unrecorded transactions• To know that All transactions are

authorised.• To know that only Business Transactions

are recording.

Vouching of Cash Transactions- Receipts/Debit Side of Cash Book

• Opening Balances• Cash Sales• Receipt from Debtors in case of credit sale• Income from Interest, Dividends etc.• Loans• Rents Received

Vouching of Cash transactions

• Bill Receivable

• Commission

• Sale of Investments

• Bad debts dividends

• Subscriptions

• Insurance cliam money

• Share capital

• Sales of fixed assets

• Income from Hire Purchase aggrements

• Miscellaneous receipts

Credit side of Cash book

• Payment should be done 1. To the right Person2. For the business Itself3. Have been sanctioned by a Person

holding some authority.4. Have been Properly Recorded in the

books of account.

Vouching of Payment Side of Cash book

1.Payments to creditors

2.Wages• (a)Time records• (b) Piece work records• (c) Preparation of wage sheets• (d) Payment of wages• Salaries

• Capital Expenditure• (a) Freehold and Leasehold Property and

Buildings.• (b) Plant & Machinery• (c) Patents• (d) Investments• (e) Payment under Hire purchase and Instalment

aggrements

• Loans

• Salaries

• Agents and Travellers Commission

• Travelling Allowance

• Insurance of Premiums

• Bills payable

• Freight Carriage and Custom Duty

• Bank Charges

• Postage

• Petty cash

• Directors Fee

• Misc expenses

• Bank account

Vouching of Trading Transactions- Purchases

1. Review of Internal Control

(i) Invoice should be in name of client

(ii) Who is authorised to place orders for the goods?

(iii) Whether clerk has checked the invoice with the order book?

• (iv) Goods should not be capital goods• (v) Test Check• (vi) Check the casting• (vii) Deduction of trade discount• (viii) Compare the goods inward book and

the stock sheets with purchase book.

• Auditor Should stamp the invoice

• Ask for the statement of accounts from the creditors.

Vouching of Purchase Returns

• Check entries in the purchase day book with the entries in the debit note issued by the Purchaser accounts departments and credit note issued by the supplier.

• Check Entries in purchase return bool with Inspection note book.

Vouching of Credit sales

• Should see the Internal check system.

• Comparison of data

• Check the omission of sales,if any

• Check the entry of sale of asset

• Sales tax,Insurance charges

• Sales to sister concerns should be carefylly examined

• Check the casting of sales book

Vouching of Sales returns

Vouching:• Cash sales,

• Receipts from Debtors,

• Cash purchases,

• Payment to creditors,

• payment of wages,

• Outstanding liabilities

Audit of• Balance sheet items like

• share capital,• Reserves and surplus,• Loans• Current liabilites

• Capital and Revenue expenditures

• Depreciation and Reserves

• CASH SALES•  • The auditor should examine the effectiveness of the system of internal

check. •  

• he should thoroughly check the carbon duplicates of cash memos with the summaries of cash sales.

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• He can scrutinize the general cash book with the summaries prepared by the cashier.

•  •  •  •  • (vouchers: carbon duplicates of cash memos, salesman’s abstracts,

cashiers summaries)

• Receipts from debtors

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• The cash received from debtors can be vouched with reference to the counterfoils of the receipts issued to them. Thus, the counterfoil is the only proper documentary evidence available for the purpose. But this is not reliable voucher as frauds are usually committed.

• By inserting less amount in the counterfoil than what is actually received form a debtor.

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• By issuing a receipt from the unused books if these are not properly kept in safe custody.

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• By the process of ‘teeming and lading’. •  

• The auditor should pay special attention to discount (vouchers – counterfoils, correspondence)

• Bills receivable• Receipts from bill discounted •  

• receipts from bills matured. •  

– Special enquiry should be made about bills which have matured but the amount in respect thereof has not been received. Such bills might have been dishonoured or retired.

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– (vouchers – bills receivable book, cash book , pass book.)

• Receipts from discounting of bills receivable•

 • The amount received on discounting of bills should be

checked with a register called bills discounted register. • Auditor should check the rough cash book. •  

• He should have a clear idea about the rate on discount allowed.

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• He must ensure that correct discount is recorded in profit and loss account.

• Amounts received on maturity• He must compare the entry of cash book with the •  

• bills receivable. •  

• Special care should be taken for those bills which have matured but payment is not received.

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• He must also ensure that the schedule of bills receivable is verified.

• Income from interest and dividend•  • If interest is received on account of fixed deposit in the bank, such

incomes should be vouched with bank pass book. •  

• If an interest is receivable from a loan granted to a borrower the agreement should be referred.

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• If the interest comes from securities, then vouching of such income should be made from a schedule obtained from some responsible official.

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• For receipt of dividend, three vouchers ….counterfoils, dividend warrants and letters received along with cheque, should be seen.

• Sale of investment•  • Investment are usually sold through brokers. Hence the

broker’s sold note should be examined. •  

• The brokers sold note contains details about the actual amount received on this account and the commission paid to the broker.

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• If the sales has been affected through the bank, the bank advice should be examined.

•  • (vouchers – broker sold note, bank advice.)

• Receipts of hire purchaser•  • The hire purchase agreement should be examined in detail. •  

• The auditor has to keep in mind that the instalments includes instalment also.

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• He should note that the whole amount of an instalment in not credited to sales account….

•  •  •  •  • (vouchers – hire purchase agreement, counterfoils of recipts)

• Proceeds from sale of fixed assets•  • Whenever fixed assets are sold correspondence is made with the parties

who are willing to purchase them. •  

• Fixed assets are sold through broker or an auctioneer. •  

• If a sale deed has been executed, it may also be examined by the auditor. •  

• Any profit so earned should be transferred to capital reserve account. •  

• The auditor should see that the sales has been duly sanctioned. •  

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• ( vouchers- auctioneer’s note brokers sold note, sales deed, insurance

• Insurance claims•  • Insurance claim money received from an

insurance company against a claim should be checked by making a reference to the correspondence between the company and the client and the amount rendered by the insurance company to the client.

• (vouchers- accounts, correspondence)

• Commission received•  • The agreement between the client and the parties

from whom it is receivable should be examined. •  

• Counterfoils of receipts should be compared with the particulars entered in the cash book.

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• If commission is received in respect of goods received on consignment, the amount of commission should be vouched with reference to the copy of the account sale sent to the consignor.

• Rent received•  • The auditor should examine the lease Deeds and agreements to ascertain

the amount of rent payable, the due date and provisions regarding the repairs.

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• If receipts are issued to the tenants for the rent paid, the counterfoil of the receipts would be a good evidence. If rents are collected by agents their accounts must be examined.

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• Particular attentions should be paid towards ‘rent-outstanding’. •  

• It is possible that rent might have been received but misappropriation while it may be shown as outstanding.

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• The auditor should get a list of unlet property duly signed by a responsible official.

• Cash received from debtors•  • Auditor should vouch cash received from debtors to whom goods

have been sold on credit and the documentary evidence available for vouching such receipts is the counterfoil of receipts issued to the debtors.

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• Following points should be considered while vouching receipts from debtors:

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– If the payment is made in the form of cheque, pass book should be verified.

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– Auditor should verify the amount received and the amount entered on the debit side of cash book.

• The following types of errors are committed by the clerks at the time of recording cash received from debtors:

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– Entry of less amount in the counterfoil. •  

– Issue of receipts from unused receipt book. •  

– Showing actual receipts of cash as discount. •  

– Showing the actual amount received as bad debt.

• Credit side or payment side of the cash book•

 •  •  •  • Auditor should satisfy himself that the payment have been actually made: •  • To the right persons, •  • For the business itself, •  • iii.Have been sanctioned by a person holding some authority,•  • iv.Have been properly recorded in the books of accounts.

• Payment to creditors•  • Money due the creditors can be compared with

the accounts of the creditors and the actual invoice received.

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• The auditor should enquire whether periodical statements are submitted by the creditors.

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• He may refer to minutes, contracts and other evidences before he passes an entry.

•  •  • In regard to cash purchases, cash memos and

goods inward book should be compared with the entries in the cash book.

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• Special attention should be paid to trade discounts •  

• If any voucher is missing, he should insist upon getting a duplicate copy of it.

• wages• — The chances of fraud or errors are:• The inclusion of fictitious names •  • Errors or fraud in time and piece-work records; •  • Possibility of clerical errors; •  • The names of the employees who have resigned; •  • Over-stating of rates of wages; •  • Over-stating the hours of work or days of work •  • Conversion of unpaid wages;

• auditors’ duty as regards wages•

 • He should see whether the internal check system is satisfactory; •  

• He should check the casts of the wages and wage book; •  

• He should check few items of the wages sheet here and there to see that calculations are correct •  

• He should check the total amount of wages payable •  

• He should check the names of some of the workers as mentioned in the wages sheet with the job cards …….

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• He should see that the wage sheet are properly initialised or signed by all the responsible persons; •  

• He may pay a surprise visit on the day of payment of wages; •  

• The number of workers as recorded in the wage sheet should be compared with the employees state insurance cards

• The total wages of each department should be compared with the original estimate made by the costing department;

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• Wage sheets of the previous months should be compared with current month;

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• Leave register should be examined; •  

• Compare the signature of the workers of two or three periods; •  

• Test check the signatures and thumb impressions of some of the workers

• Bills payable• Returned bills duly cancelled should be

examined. •  

• It would be a sufficient evidence of the amount having been paid.

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• Reference may be made to the bank pass and bills payable books.

• Capital expenditure• Plant and machinery; •  

– auditor can vouch the purchaser of plan and machinery with the invoice received form the supplier.

•  • Expenses incurred for installation, import duty and clearing

charges should be capitalised •  • If the plant and machinery is purchased through brokers the

documentary evidence is brokers bought note. •  • In certain cases physical verifications can be done.

• Patents and copy rights•  • Acquisition copyrights and patents can be vouched with the

receipts issued by the seller or agent’s note •  

• Commission paid on such acquisition should be capitalised. •  

• If patents and copyrights are developed through R&D, all the expenses incurred on such experiments should be capitalised.

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• Renewal fees is treated as revenue expenditure.

• Purchase of fixed assets (L&B)•  • If the purchase of freehold land or building is made, the Title Deed should

be examined. •  

• If the property purchased is leasehold, in which case the purchaser’s right over the property is for some period.

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• If the property is purchased through the broker, the broker’s note should be examined.

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• The expenses incurred are: auctioneer’s commission, brokerage, registration fee, architect’s fee, etc.,

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• (vouchers-Title Deed Lease, Auctioneer’s Note, Broker’s Note, Receipts, Contract, Architect’s certificate)

• Purchase of plant and machinery

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• A reference to the invoice and receipt obtained from the supplier can be vouched.

• Investments•  • Payments for purchase of shares , securities etc, should be

vouches with the Brokers bought note. •  

• According to sec 292 auditor should ensure that investments have been purchase by a resolution taken in the board meeting.

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• In case of JSC auditor should see to it that investment in shares have been subject to the provision of AOA

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• If the investments are related to new issue of shares letter of allotment must be checked.

• Purchase of furniture•  • Auditor must verify the furniture register where the purchase

of furniture is recorded. •  

• The invoices related to the purchases may be used as the documentary evidence.

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• The expenses incurred on purchases should be capitalised. •  

• Auditor can also physically verify the letter of sanction for the existence of furniture.

• Freight, carriage and customs duty•

 •  •  •  • The statements of accounts regarding the payment of freight

and carriage submitted by the shippers, clearing agents, together with the receipts issued by them, should be examined

•  • He should see that allowances in respect of rebates have

been brought into account.

• Deferred Revenue Expenditure• It is basically a revenue expenditure. •  

• Professor Arnold Johnson defines Deferred charges as •  

• “ nonrecurring expenditures which are expected to be of financial benefit to several accounting period in determinate total length.

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• Expenditure which,, though of revenue nature, is spread over a number of years because its benefit is derived during those years. Such an expenditure is called DFE.

• Expenditure incurred in launching and advertisement campaign, • Development expenditure in the case of mines. •  

• Experimental expenditure •  

• Research expenditure •  

• Discount allowed on the issue of debenture.• Advertising •  • Preliminary expenses •  • Alterations and Heavy Repairs to plant etc., •

• Preliminary expenses•

 • Expenses which are incurred in connection with the promotion and formation of a new

company are called P.E the following items are generally included under this head: •  

• Cost of drafting and printing of various legal documents. •  

• Stamp duty on legal documents, fees payable on their filling with the office of the registrar. • Cost of advertising and distributing company’s prospectus. •  

• Cost of printing application forms, allotment forms, share and other legal certificate. •  • the P.E should be written off against profit and loss account over a period of 3 to 5 years.

• Cost of issue of shares and debentures•

 •  •  •  •  • Section 85 to 90 make provision in respect of various kind of share capital of a company. •  

• The most important duty of an auditor, in the first year’s audit of a newly formed public company is the verification of share capital transactions.

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• He should ensure that the requirements as laid down in this connection have been complied with.

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• He should see that the share capital has been shown in the balance sheet . •  

• Vouch the entries in the cash book for calls received from the counterfoils of the receipts issued.

• Debentures•

 •  • Under sec 292(1) the board of Directors of a company shall exercise the power to issue

debenture only by means of a resolution passed at the meeting of the board. •  

• The auditor of the company should study the AOA and the MOA of the company. •  

• He should study the company in order to find out the borrowing powers of the company. •  

• He study the terms and conditions in the issue and repayment of debentures as contained in the prospect6us and ensure that all the terms and conditions are strictly adhered to.

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• The procedure of vouching the receipts of cash in connection with the issue of debentures is the same like vouch the entries in the cash books for calls received from the counterfoils of the receipts used.

• Underwriting commission•

 • As for U.C is concerned, the auditor should look into the agreement

between the company and the underwriters regarding the commission payable.

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• He should find out whether the commission is paid only on marked applications.

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• If the issue is not fully subscribed, the auditor should see whether the underwriter has discharged his liability before the commission is paid. This is essential as sometimes the commission is paid even before the full subscription has been met with.

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• Auditor should also ascertain whether the commission calculation has been properly made.

• Director’s fees ( minute book, attendance register, •  

• AOA, Resolution of share holders) •  

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• Dividend ( Dividend Warrants, Pass book etc.,) •  

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• Commission (Agreement, statement of accounts) •

• Internal check as regards purchases•

 • The system of internal check will depend upon the size of the business the

staff available . •  

• Purchase requisition •  

• All the orders sent out should be recorded in the purchase order book which should have two carbon copies.

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• When the goods are received, the gatekeeper or store keeper should make a record in the goods inward book.

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• The invoice should be checked with goods inward book •  

• Another clerk should check the invoice regarding calculations etc.,

• After this the invoice should be sent to the head of the department.

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• The departmental head will then pass over the invoices to the clerk who will record the same in the purchase book.

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• Every person who has to deal with the invoice and the goods should initial the book.

• He should keep in mind the following:• The invoice is in the name of his client •  • The date given in the invoices relate to the period under audit. •  • The invoice relates to the business in which the concern deals. •  • Invoices is initialled by some responsible person. •  • The invoice is entered in the name of supplier in the purchase book. •  • The trade discount has been deducted.

• Goods inward book-avoid the inclusion of fictitious invoices . •  • It should be seen that no invoices has been entered twice in the books. •  • It has to be examined that capital purchases have not been written as

revenue expenditure. •  • 5.He should verify whether the price charged by the supplier tallies with the

quotation.•  • 6.If proper voucher is not available is should ask for duplicate.•  • The totaling of the purchases book should be verified and all taxes, freight

charges have already been recorded. •  • Any purchase made not for the business purpose must not be debited to the

purchase account.

• Purchase Return book•  • He should examine the credit notes with the

purchase book and goods outward book. • Check casting and posting of the PRB •  

• The quantity returned as per the return note should correspond with the store keepers record , return outwards register.

• Sales Book•

 • He should compare the names, the date, the amount. •  

• If some distinction is made granting trade discounts to two different customers, the reasons should be enquired.

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• Sales is vouched with the help of Orders received book and goods outward book. •  

• The auditor should especially examine the sales relating to the beginning or at the close of the financial year.

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• It should be seen that capital sales are not treated as revenue sales. •  

• He should check the casting and posting of the sales book. •  

• Cancelled sales invoices hould be kept together.

• Sales return book•  • Check sales return book with the help of copies of notes maintain in the

goods inward book. •  

• Credit note should be issued only if he has returned the goods. •  

• He should analyze the reasons for the goods being returned. •  

• The quantity and quality of goods returned must be verified. •  

• date, gate keeper receipt book, return inward register, stores records, corresponding entries

•  

• He should also ensure that the closing stock is valued at cost or market price whichever is less.