Print out a petty cash form or petty cash vouchers and keep in the locked box with your petty cash. Recording of transaction in cash book and journal with specimen. At the end of the period a petty cash reconciliation is carried out. Petty cash book may be maintained by the ordinary system or by imprest. Petty cash book 2019, imprest system of petty cash. Payments in cash of small amounts like traveling expenses, postage, carriage etc. These petty cash expenses are recorded in the petty cash book.
Accounting for petty cash explanation, related controls and. We can maintain cashbook in excel to manage our cash. Two types of petty cash book maintained by small or. This article throws light upon the three main types of cash book that can be maintained in a farm business. The combination or key to open the box should be kept in. Review your petty cash register before you replenish the petty cash fund. Petty cashier is a person, who maintains the petty cash book. Petty cash is a small reserve of cash kept onsite at a business location for incidental cash needs. This type of cash book usually uses the imprest system.
Meaning of petty cash book, its importance and advantages. But these small amounts of cash expenditure can cause big headaches for voluntary and community groups when the petty cash system goes wrong. One major advantage of this system is that it saves time. The amount of reimbursement is equal to the expenses paid through petty cash since the time of last reimbursement. While writing a single column cash book the following points should be kept in mind. Two types of petty cash book maintained by small or large companies for easy, quick and accurate recording of all cash transactions. Petty cash book format example definition explanation. The drawer needs to be in the custodians desk or another drawer that is easy for the custodian to get to. Such a cash book is maintained by the petty cashier who in most cases also handles the petty cash. A petty cash book is a record of smallvalue purchases before they are later transferred to the ledger and final accounts. Even though the amounts are small, petty cash expenses can add up to annual amounts that must be tracked for financial reporting purposes. When a business doesnt provide access to company credit cards, or employees would rather not wait to be reimbursed for purchases, using petty cash is a simple alternative.
When the cashier requests for reimbursement of petty cash, he creates a petty cash voucher detailing the payments made through petty cash during the. Dec 15, 2018 add a petty cash account to your chart of accounts if you do not already have one. How the imprest system of petty cash book works your. Youll also want to purchase a lock box for the cash and receipts. Top 3 types of cash books with specimen article shared by. Sometimes it may be maintained on nonimprest system. The person who is responsible for the recording the receipts and the payments is known as the petty cashier.
Safes are given a rating specifying the maximum value of cash to be held in the safe. Thus, the book is part of a manual recordkeeping system. Before the rise in the use of credit cards and charge cards, nearly all companies used petty cash accounts to allow employees responsible for purchasing small supplies to do so with minimal hassle. Besides maintaining a main or general cash book, many companies also maintain a small cash book known as petty cash book to record small day to day expenditures of the business. Reconciling petty cash entails making sure you have a receipt for every petty cash purchase in your petty cash log and creating a journal entry to record it on the books. 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. Petty cash refers to a small amount of currency and coins that a company uses to pay small amounts without writing a check. So since the number of such transactions tends to be very high we maintain a separate cash book for them the petty cash book. The balance of petty cash book may be positive or negative dr or cr. In big business apprehensions, the petty cash book is maintained in analytical form, with a detach column for each standard item of expense and a column for total. The person who is maintaining petty cash book is called as a petty cashier. How to set up and maintain a petty cash account basic.
Many businesses keep a petty cash fund to pay for small daily business expenditures such as office supplies. You need to develop a set of policies or procedures dictating the handling of cash in your business to avoid problems such as theft and misappropriation. There are two primary types of entries in the petty cash book, which are a. How process transactions in the petty cash book for more go to to donate. Petty cash book can be maintained either in a simple or in analytical way.
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. Meaning of petty cash book a petty cash book is one in which all petty or small payments made through petty cash fund are recorded systematically. Sep 30, 2019 is the petty cash box a help or a hindrance. Format of the petty cash book bookkeeping debits and credits.
Each entry in the petty cash book should include the date, the amount, and what was purchased with the petty cash. Click here to download all accounting excel templates for rs 199. Petty cash balance after reimbursement reverts to back to the level of the float. It is another cash book which is maintained, generally, in large business. A petty cash book is a ledger kept with the petty cash fund to record amounts that are added to or subtracted from its balance.
To set up and maintain a petty cash fund, you must fund it with monies from your business. In most cases, the petty cash book is an actual ledger book, rather than a computer record. Yet another variation on the petty cash book is to maintain it as a. Each month, accountants or other employees will need to balance petty cash and replenish the funds. Petty comes from the french word petit meaning small. The firm may adopt imprest system of maintaining petty cash. Every time a payment is made through petty cash, it is recorded in the petty cash register usually by the cashier. It is easy to set up and will save you from writing a lot of small checks or using your personal funds. It may be maintained by ordinary or by the imprest system. Under the system, the petty cash fund balance is always maintained at a fixed amount decided on when the fund is first established during an accounting period petty cash is used to pay cash expenses which are supported by petty cash vouchers. In the company, the petty cash book is usually maintained by the administrative department of the company as the accounts departments are usually occupied. All the received cash is posted on the debit side and all payments and expenses are posted on the credit side of the cash book. Petty cash book system are also called as imprest system.
The following points highlight the importance and advantages of petty cash book which can be taken as its objectives as well. Types of petty cash book in accounting with diagrams and examples small or large companies maintain 2 types of petty cash book for all cash transactions of a business. Totals are carried forward from page to page until the end of the periods. Petty cash book is a formal book of recording petty expenses which are incurred in cash.
Require that employees maintain a running petty cash log for every transaction, including receipts. These are expenses which are incurred day after day. The basic process of setting up a petty cash system is. This book records all those expenses which are small. Itdepends on the nature, volume and necessity of transactions of a business organization. The petty cash book is to enter how the cash available for daily expenses are spent for example milk, tea, taxi charges and. Fixed amount is paid to the petty cashier along with the imprest system. Managing a petty cash account for your small business.
Buying lunch for staff, purchasing office supplies or postage are the types of expenses paid out of petty cash. It is a special book that will record only one type of transactions cash transactions. For this reason, safeguarding and accounting for petty cash transactions should not be overlooked. Prepare a two column cash book from the following entries. Since cash account is a real account, this ruling is followed, i.
In this book, separate columns are provided for usual head of expenditure. Petty cash is an easy to understand and familiar method of paying for company expenses. When an analytical petty cash book is maintained for recording the petty expenses, it will be practically more convenient to consider the petty cash as a separate account and take cheques issued for the petty cash imprest as a debit to petty cash account and all petty expenses paid as credits in petty cash account. Petty cash book definition, types, format, examples. Feb, 2018 cash book is use to record little expenses. 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. The petty cash book will be maintained by a separate cashier known as petty cashier in the accounting field. It is an accessible, convenient way to pay for small purchases. Under the system, the petty cash fund balance is always maintained at a fixed amount decided on when the fund is first established.
Petty cash boxes should be kept out of sight in a closed drawer. Safes are given a rating specifying the maximum value of cash. However, the petty cash book may or may not be maintained on. A petty cashier makes a detailed analysis of petty payments and records under suitable heads, i. Is there a better way to solve the small expenditure dilemma. The additional analysis columns are used to analyze expenditures as they arise. Under this system an estimate is made of the amount required for small payments for a certain period, say, a week or a month and this amount is paid to the petty cashier in advance. A company typically uses petty cash to make small purchases or reimburse employees for minor expenditures. Importance and advantages of petty cash book business performing a large number of petty transactions usually maintain a separate petty cash book.
The imprest system is an accounting system for paying out and subsequently replenishing petty cash. The petty cashier is given a certain sum of money at the beginning of the fixed period e. Any cash, which the petty cashier receives, will be recorded on the debit side left cash column of the book and any cash which he pays out will be recorded on the credit side right cash column of the boo k. A brief guide to petty cash voluntary action lewisham. This kind of petty cash book is known as analytical petty cash book. A petty cash book is generally maintained on a columnar basis a separate column being allotted for each type of expenditure. Documenting transactions is the way a business documents business expenses for tax purposes. Start a petty cash fund by writing a check drawn on your company to petty cash.
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. Petty cash book is a type of cash book that is used to record minor regular expenditures such as office teas, bus fares, fuel. To record such expenses, a different book known as a petty cash book is maintained. A petty cash is a cash book used to enter all small or petty expenses obtained. The use of petty cash funds should be limited to reimbursement of staff members and visitors for small expenses, generally not to exceed. What is the production insurance policy limit for the amount of cash that can be kept in the company premises and does the policy also require that the money is kept in a safe. Here are some advantages and disadvantages to using petty cash as an expense management solution. Petty cash book 2019, imprest system of petty cash advantages. By keeping track of all petty cash transactions no matter how petty you have records to back up deductions for those small business expenses. If debit it is assets, if credit is is a liability.
Mar 27, 2020 a petty cash system is a set of policies, procedures, controls, and forms that a company uses to dispense cash for various miscellaneous needs, such as office supplies and services. University policy the purpose of a petty cash fund is to provide cash to business units sufficient to cover minor expenditures. They are accountable for all monies in and out of the fund and makes sure it is maintained. The pages of the cash book are vertically divided into two equal parts. Beside petty expenses, receipts from main cash are recorded. The petty cash book is ruled in the form of the single column cash book with an amount column and addition oat columns for the more usual classes of expenditure. When an analytical petty cash book is maintained for recording the petty expenses, it will be practically more convenient to consider the petty cash as a separate account and take cheques issued for the petty cash imprest as a debit to petty cash account and all petty expenses paid as. The simplest way to do this is to write a check to petty cash using. Jun 20, 2018 the balance of cash book is directly posted to the trial balance. There might be a petty cash drawer or box in each department for. Click here to download simple cash book excel template.
Besides maintaining a main or general cash book, many companies also maintain a small cash book known as petty cash book to record small day to day. Mar 28, 2019 to account for petty cash, create a transaction log that covers the date, the person who used the petty cash, a description of the transaction, and any other deposits or expenses. The petty cash book is defined as relatively small amount of cash kept at hand for making quick payments for miscellaneous small expenses in the business. The imprest petty cash system is a method of accounting for petty cash expenses. A separate column is allotted for each type of expenditure. Jul 16, 2019 the most important part of a petty cash system is the documentation of each transaction. The most important part of a petty cash system is the documentation of each transaction. Petty cash book explanation, format, example, ordinary and imprest. Here we detail about the three types of cash book, i. Nov 27, 2019 the imprest petty cash system is a method of accounting for petty cash expenses.
For this purpose, a petty cashier is appointed by the chief cashier. A petty cash book is a book of vouchers which are prepared each time a disbursement is made from petty cash. Small or large companies maintain 2 types of petty cash book for all cash transactions of a business. Petty cash book definition, types, format, examples imprest and. The petty cashier makes the small payments and records them in the petty cash book. The voucher would show the date, amount, recipient, purpose and. 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. The simplest way to do this is to write a check to petty cash using your business checking account. Petty cash book is maintained by the petty cashier. There are two primary types of entries in the petty cash b. The petty cash book is a formal summarization of petty cash expenditures, sorted by date. In an organization thousands of cash transactions occur in a year and journalizing them all is tedious work.
However, the petty cash book may or may not be maintained on imprest system. This type of book is maintained just like a cash book. For this purpose petty cash book is to be maintained by such employee. Most cash should be deposited right away in the bank, but a small amount can be kept on hand in a petty cash account earmarked for minor.
May 09, 2014 generally, petty cash book is maintained on imprest system. In the company, the petty cash book is usually maintained by the administrative department of the company as the accounts departments are usually occupied by the larger business transactions and also the admin department is only responsible for such kind of expenses. The chief cashier is relieved from the cumbersome work of petty cash disbursement. The petty cash book is maintained by separate cashier known as petty cashier. The petty cashier so appointed for recording the small and petty. When you need to make a small purchase such as a book of stamps, take a ten or twenty out, make your purchase, and when you returnput the petty cash receipt remember to always get a receipt and change back in the box. The cash book is 100% free for you to download and use forever, and it is fully customizable so you can change anything in it. This excel cash book is suitable for any small business that wants an easy bookkeeping method a simple way to track your income and expenses. The first row is for the company name and second for the title of the template. Accounting for petty cash explanation, related controls. Petty cash book is maintained to record small expenses such as postage, stationery, telegram. Sep 19, 2019 petty cash or the petty cash fund is a small amount of cash on hand used for paying expenses too small to merit writing a check. Petty cash book with imprest system simple and tabular forms. The cash book can be maintained properly as petty transactions are maintained separately.
Variation on the petty cash book is to maintain it as a spreadsheet, where each item is recorded in a specific column that is designated for a particular type of receipt or expense. The advantages of petty cash system enumerated are as follows. Petty cash book is a kind of cash book which records large number of small payments such as conveyance, cartage, postage, telegrams and other expenses under the imprest system. This format makes it easier to record petty cash activity in the general ledger. Mar, 2018 the petty cash book is a formal summarization of petty cash expenditures, sorted by date. Add a petty cash account to your chart of accounts if you do not already have one. Petty cash book is the book which is used for the purpose of recording expenses involving small amounts. The amount of petty cash also known as the petty cash fund varies by company or organization. Recording of transaction in cash book and journal with.
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