Definition
Direct Charge Voucher (DCV)
Direct Charge Voucher (DCV) is a prime accounting document used to specifically record the direct purchases of parts and materials that are applicable to a particular job or process within an organization. These items are directly expensed to the project’s or job’s cost without transiting through the organization’s store inventories. The DCV document details the description of the items, commodity codes, the value of the items, and the respective accounting or cost codes that these items are chargeable to.
Examples
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Construction Project: In a construction project, a DCV might be used to directly charge the purchase of specific building materials such as cement and steel to a particular phase of the construction without the need to move these materials into a central storage facility first.
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Manufacturing Process: A manufacturing plant may use a DCV to charge specialized parts directly to a production line where they are immediately needed, rather than storing them in a warehouse for future usage.
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IT Services: An IT department might use a DCV to charge the purchase of specific software licenses directly to a client project if they are needed immediately for project execution.
Frequently Asked Questions (FAQs)
What information is typically included in a DCV?
A Direct Charge Voucher generally includes:
- Item description
- Commodity codes
- Item values
- Accounting or cost codes chargeable
Why is a DCV used instead of regular inventory management?
A DCV is used to streamline the process and make immediate materials or parts available for jobs or processes. This bypass reduces delays and avoids unnecessary handling that would occur if items had to pass through general stores.
How does a DCV differ from a purchase order?
A purchase order is a document issued to vendors to acquire goods or services, whereas a DCV is used to directly charge items to specific jobs or processes within the organization. It is more focused on internal accounting and cost allocation.
Can a DCV be used for all types of purchases?
Typically, DCVs are used for parts and materials required urgently for specific jobs. General, bulk, or indirect supplies are usually not recorded through a DCV.
Are DCVs applicable to services as well?
In general practice, DCVs are more commonly used for tangible goods. Services may be directly expensed via different internal processes but could, in some scenarios, be documented similarly.
Related Terms
Purchase Order
A commercial document and first official offer issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services.
Job Costing
A system of expense tracking in accounting used in situations where each customer order is unique compared to mass production. Costs are assigned to specific jobs relating to customer projects.
Commodity Codes
A system of classification for goods used internationally in trade and logistics, which standardizes product categories for reporting and analysis.
Inventory Management
The supervision of non-capitalized assets (inventory) and stock items to ensure an organization’s supply chain runs smoothly.
Online References
- Investopedia: Purchase Order Definition
- The Balance Small Business: What Are Commodity Codes?
- Accounting Tools: What is a Job Costing System?
Suggested Books for Further Studies
- “Cost Accounting: A Managerial Emphasis” by Charles T. Horngren, Srikant M. Datar, and Madhav V. Rajan
- “Management and Cost Accounting” by Alnoor Bhimani
- “Accounting for Value” by Stephen Penman
- “Intermediate Accounting” by Donald E. Kieso, Jerry J. Weygandt, and Terry D. Warfield
Accounting Basics: “Direct Charge Voucher” Fundamentals Quiz
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