Final answer:
A voucher system is a series of protocols within a business's internal controls designed to manage cash payments and liabilities, ensure transaction validation, and safeguard financial assets.
Step-by-step explanation:
A voucher system is an integral component of a company's internal controls. It involves a series of checks and balances that are designed to manage and control cash payments and the commitment of company liabilities. The primary purpose of a voucher system is to ensure that expenditures are necessary, justified, and that they are recorded correctly in the accounting system. For instance, before a payment is made, the system requires that supporting documents are reviewed and approvals are obtained to validate the transaction.
In the broader context of a payment system, which facilitates the exchange of goods and services for money or other financial assets, the voucher system plays a critical role. It helps maintain the integrity of cash flows by preventing unauthorized or fraudulent payments, thereby safeguarding a company's financial assets, which include reserves, savings deposits, and ensuring that the standard of deferred payment is upheld.
Furthermore, this process aids in maintaining a company's net worth by controlling expenditure and assuring that funds are used appropriately and effectively within the business operations. Lastly, in the context of storing value, a robust voucher system contributes to preserving the economic value of assets ensuring they are spent or consumed judiciously over time.