It is another cash book which is maintained, generally, in large business concerns to reduce the burden of main cash book, in which numerous transactions involving petty small amounts are recorded. Since only cash transactions are recorded in the cash book, it is a special journal. Balances in the cash book are taken directly to the trial balance. All petty cash funds should be established in accordance with the outlined procedures, i. Evidence of the audit, including the supervisors signoff, should be maintained. Thus, the book is part of a manual recordkeeping system. Petty cash bookmeaning, advantages, format, example. Petty cash book, as the name suggests, is for very small transactions that take place in an organisation. It is easy to set up and will save you from writing a lot of small checks or using your personal funds. Debit increase petty cash current asset account on the balance sheet credit decrease cash in bank current asset account on the balance sheet. In the previous chapter, it has been described that cash transactions are recorded in the cash book and petty cash book. Petty cash book is an accounting book used for recording expenses which are small and of little value, for example, stamps, postage and handling, stationery, carriage, daily wages, etc.
As a result, companies keep and maintain a petty cash book, so all such transactions, which are small or insignificant in nature can be recorded under one head. Petty cash book definition, types, format, examples imprest and. Cash book is a book in which an account is kept of the receipts and disbursements of money. Petty cash financial accounting simple book production. Sep 19, 2020 petty cash book is a separate cash book maintain ed for recording frequent payments of small amounts for various purposes such as postage, carriage, stationery, printing, traveling, etc as it is not desirable to record such small but numerous payments in the main cash book. While checking the total of such expenses, the head cashier can put objections on undesirable expenses. This initial setup amount is sometimes referred to as your float. The is only one money column on the debit side and all sum received.
Recording of transactions ii petty cash book solutions. A petty cashier receives a fixed amount of money from the head cashier with which he meets petty expenses of a certain period and records in chronological order of dates in the petty cash book. Petty cash book is maintained by the petty cashier and act as the petty cash book petty cash book 3. Petty cash book explanation, format, example, ordinary and. When the account goes below a certain specified amount, the system is replenished. The petty cash book is a book of original entry used for recording small cash expenses incurred on a regular basis by different officers in the office. All petty payments are to be classified into different heads and different columns are maintained. All cash transactions are recorded in the cash book.
It has dates and other relevant columns that are supposed to be. A petty cash book records all the petty cash vouchers maintained by a cashier. Cashier must be responsible to keep supporting invoices in respect of payments made through petty cash. Petty cash book is maintained to record small expenses such as postage, stationery, telegram. Petty cash book explanation, format, example, ordinary and imprest. This is the only amount of cash that is not immediately deposited in the bank account after it is received. The petty cash book is maintained by the petty cashier or the officer in charge. Ppt petty cash book powerpoint presentation free to view.
Replenishing petty cash for allowable expenditures. Yet another variation on the petty cash book is to maintain it as a spreadsheet, where each item is recorded in a specific column that is. Cash book definition, types accounting format of cash book. This tutorial contains excel file which can be used in case the value changes 1. Petty cash book difference between cash book and cash account cash book in. Just like a normal cash book, a petty cash book is periodically maintained across a month. It also serves the purpose of a ledger account and therefore, the cash account and bank acccount are not maintained in the general ledger. Petty cash register shows the following payments in the month of january. These small expenditures are usually paid using coins and currency notes rather than checks. Hence to record the different transaction according to their nature, there are different books and this is termed as subdivision of journal.
In most cases, the petty cash book is an actual ledger book, rather than a computer record. What is petty cash and what is the best way to manage it. Petty cash refers to a small amount of currency and coins that a company uses to pay small amounts without writing a check. It has dates and other relevant columns that are supposed to be included in order for auditors or accountants to reconcile the amounts that have been disbursed as petty cash book payments at the end of the subsequent accounting cycle or the month. Petty cash funds established by any other means are. Petty cash book can therefore, be described as a ledger that lists down all the petty cash expenses that the company has incurred over a specific course of time. Petty cash definition, explanation and journal entries. So, to avoid this an analytical petty cash book is maintained in place of the simple cash book. Surprise cash counts must be conducted time to time to ensure the accuracy of the cash balance stated in the petty cash. Oct 04, 2017 a reconciliation of petty cash funds should be completed on a monthly basis. The definition of petty is something thats deemed to be of low importance and this is often reflected in the amount of focus it receives within a business. Jul 24, 2018 analytical petty cash book or columnar petty cash book is different from the simple petty cash book in the sense that in this type of petty cash book, an analytical presentation of cash payment is made. When a petty cash fund is established, a check is issued against a university general.
A separate column is allotted for each type of expenditure. The petty cash book format provided below is crucial in highlighting the running balances to help the petty cashier regulate various allocations. Petty cash book format example definition explanation. Cash book definition, features, types and advantages. Purchases ac is also opened in the ledger, but entries are recorded in it by monthly total. Petty cashier is a person, who maintains the petty cash book. Petty cash funds are routine expenses that involve the insignificant amounts of money not eligible for credit card and cheque payments.
The difference between the total of the debit items and that of the total column on the credit represents the balance of the petty cash in hand. The employee, who keeps the petty cash book, is called petty cashier. For this purpose, a petty cashier is appointed by the chief cashier. Jul 20, 2016 my concern is about the method of treating your drew cheaque for petty cash. A petty cash voucher is a document or form that shows the amount of and reason for a petty cash disbursement. Such a large number of entries make the task of posting a very difficult one. It may be maintained by ordinary or by the imprest system. Ppt petty cash book powerpoint presentation free to. If there is a petty cash book, the custodian enters the amount of the cash received in the book, and updates the running total of cash on hand. Since only the total of various small expenses are recorded in cash book.
A system called the imprest system is used for maintaining petty cash. A petty cash book, therefore, serves the purpose of a ledger, keeping track of all business payments made on a small scale. An imprest system of petty cash means that the general ledger account petty cash will remain dormant at a constant amount. A petty cashier makes a detailed analysis of petty payments and records under suitable heads, i. Petty cash accounts are often left to operate with minimal external monitoring. After writing to sundries as per purchases book on the debit side of it, the amount of monthly total of the purchase book is written. A petty cash book is an accounting book used for recording expenses which are small. Importance of cash book the features of the cash book are as follows.
In this book, separate columns are provided for usual head of expenditure. How to set up and maintain a petty cash account basic. Petty cash is the small amount of cash that is kept on hand by a company to pay for minor, inexpensive purchases during the normal course of operations. There are two primary types of entries in the petty cash book, which are a debit to record cash received by the petty cash clerk usually in a single block of cash at infrequent intervals, and a large number of credits to reflect cash withdrawals from the petty. The is only one money column on the debit side and all sum received from time to time by the petty cashier from the chief cashier are entered in it. Petty cash book is a type of cash book that is used to record minor regular expenditures such as office teas, bus fares, fuel, newspapers, cleaning, pins, and causal labor etc. To avoid this inconvenience, such items of expenditure of frequent occurrence are removed to a separate book, known as petty cash book, which is maintained. Jul 16, 2019 petty cash works on the imprest system, in which there is an initial amount of money put into an account, which is drawn upon for a specific purpose in this case, petty cash. March 1, 2021 a petty cash account is simply money kept on hand to pay for minor cash items such as stamps, office supplies, tips, parking tolls, etc. For this purpose, a petty cashier is appointed by the firm, to pay for small payments usually below rs. Analytical petty cash book in a lot of business houses expenses of similar nature are incurred again and again because of which a lot of entries are made in the cash book. Petty cash book is a ledger book, which is used to record petty cash expenses formally in chronological order, with the date. As the petty expenses are recorded by petty cashier hence the labor. But business has not only cash transactions, but it has credit transactions also.
Many expenses of small nature are recorded in petty cash book. Petty cash is often used to pay for postage, small office supplies, and other small purchases. Dec 15, 2020 the petty cash book is a recordation of petty cash expenditures, sorted by date. Petty cash book definition, types, format, examples. The amount of petty cash also known as the petty cash fund varies by company or organization. Nov 04, 2015 it is the book which is used for the purpose of recording expenses involving small amounts. It is another cash book which is maintained, generally, in large business concerns to reduce the burden of main cash book, in which numerous transactions. A petty cash fund is a small amount of cash kept on hand to pay for minor expenses, such as office supplies or reimbursements. Two types of petty cash book maintained by small or. Voucher is a form which shows what a payment is for.
Enjoy the videos and music you love, upload original content, and share it all with friends, family, and the world on youtube. The custodian should prepare a voucher for each disbursement and staple any source documents invoices, receipts, etc. Policy 050606 petty cash pittsburgh and regional campuses. As head cashier checks the accounts of previous month and gives advance for the coming month, thus, errors if any are reduced.
The department is responsible for performing monthly surprise audits of the fund. The petty cash account is a current asset and will have a normal debit balance debit to increase and credit to decrease. Small or large companies maintain 2 types of petty cash book for all cash transactions of a business. These expenses are classified in the petty cash book as per the individual expense. Or the book in which those small payments are recorded, which are not convenient to record in main cash book, is ca. The cashier gives the cash to the petty cash custodian, who includes it in the petty cash fund. The petty cash vouchers summarize expenses paid by the cashier.
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