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 . Here we discuss the format of Petty Cash Book, Types of Petty Cash Systems including the Ordinary and Imprest System along with its advantages and. The maintenance of a small cash balance to meet these petty payments. The Imprest System is used for petty cash book maintenance. For example, On June 1 .
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The petty cash book is a book of vouchers which are made each time an expense is made from petty cash (money). Always the voucher would show the amount. Definition. The book in which those small payments are recorded, which are not convenient to record in main Cash Book, is called petty cash. In most cases, the petty cash book is an actual ledger book, rather than a computer record. Thus Sample Petty Cash Book (Running Balance).
Page no. These numbers will be entered in this column. The petty cash book is original entry book so we will post these all transaction in the ledger.
So, the page no. The payment amount of transaction of all petty expenses met by petty cashier will be recorded in this column. For small-scale business, simple petty cash book is sufficient but on a medium or large scale business number of petty expenses increases hence it is desirable to have the separate record for each type of petty expenses.
The format of it is shown below:. Skip to content. What is Petty Cash Book? Head Cashier may pay cash in the following methods: When Needed Fixed amount for a fixed period Imprest account 1. When Needed: Fixed amount for a fixed period: In this system, Head cashier pays a fixed amount to the petty cashier for a fixed time it may be for a day, a week or a month 3.
Imprest account This system is generally followed by most of the business concerns. Type of Petty Cash book: Simple Columnar or Analytical 1.
Analytical and simple Petty Cash Books are reliable in monitoring how small transactions routinely take place in a business. The format of a Petty Cash Book is simple and involves the details discussed below. Below is a breakdown of all columns and information contained in a Petty Cash Book.
A Petty Cash Book takes in relevant details concerning downloads. In some cases, a description field is provided to help the petty cashier feed insufficient information about every download. When an employee downloads a screw, they should indicate in the description column how they used or intend to use the screw productively. It is a requirement to state the download date and cost.
Precision is critical when preparing a Petty Cash Book to reflect how much was spent alongside the balance.
Always reserve a column for the running balance to keep track of how much petty cash has been spent together with the portion left for future use before the next cash infusion. All the amount recorded in a Petty Cash Book should justify all the outflows and inflows.
An excellent petty cash system should make it easy to verify accuracy and honesty in small transaction recordings. If the money received into a petty cash drawer does not match that given out, then the totals do not reconcile. You can avoid these regular-occurrence-frustrations by reconciling your totals every time you record a new transaction into the Petty Cash Book.
Always remember that a Petty Cash Book is a part of the Main Cash Book in any business, that provides details for profitability assessment and taxation purposes.
It is therefore advisable to integrate details recorded in petty cash to the Main Cash Book for overall accounting purposes. Indicate how money allocated for small expenses was used and how it affected the profit margins. These small expenditures are usually paid using coins and currency notes rather than checks. The person responsible for spending petty cash and recording it in a petty cash book is known as petty cashier. He, therefore, usually delegates the responsibility for handling small day to day cash transactions to a bookkeeper, receptionist or some other reliable staff member.
Like a general cash book, a petty cash book has a debit and a credit side.
All receipts are recorded on the debit side and all payments are recorded on the credit side of petty cash book by the petty cashier.
The cash allocated for petty expenditures for a specific period is entered on the credit side of general cash book and on the debit side of petty cash book. The cash is given to the petty cashier either on ordinary system or imprest system which are briefly explained below:. Under ordinary system, a lump sum amount of cash is given to the petty cashier.
When the whole amount is spent, the petty cashier submits the details of petty expenditures recorded in the petty cash book to the head or chief cashier for review.
Under imprest system, a fixed amount of money known as float is given to the petty cashier to meet petty expenditures for an agreed period which usually consists of a week or month.
At the end of agreed period, the petty cashier submits the details of all expenditures incurred by him to the chief cashier. The total cash spent by the petty cashier during the period is reimbursed to him and the total cash available to spend at the start of the next period becomes equal to the original sum i. At any time, the total of petty cash balance and all expenditures that have not been reimbursed to the petty cashier is equal to the agreed float.
The imprest system of petty cash is used by most of the companies because of the following advantages:.
The petty cashier of John and James Company paid cash for the following expenditures during March Record the above transactions in a petty cash book assuming a petty cash imprest system is used by the John and James company. Thanks a lot, my question is how can i enter transactions in a cash book marked with date.
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