Most businesses allow their employees access to a petty cash fund to make small purchases that would be a hassle to put through company accounts individually. How the imprest system of petty cash book works your business. Keep a separate box file labelled petty cash for receipts for business purchases. 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. Petty cash book format example definition explanation. If you let your workers dip in and out of your petty cash reserves, its wise to keep a close eye on whats coming in and.
This is so because, as explained later, subsequent checks drawn to replenish petty cash are not debited to petty cash account, but are charged directly to the various accounts for which the petty cash funds have been expended. Uses of petty cash book its a cash book used to enter daily petty expenses like cost of stationery, postage and xerox copy and so on. When a business increases the price of an item before it is sold. A petty cash book is a record of smallvalue purchases before they are later transferred to the ledger and final accounts. A cash book is a type of subsidiary book where cash or bank receipts and cash or bank payments made during a period are recorded in a chronological order. This type of cash book usually uses the imprest system. Read this article to learn about the meaning and preparation of analytical and imprest system of petty cash book. Petty cash book is a type of cash book that is used to record minor regular expenditures such as office teas, bus fares, fuel. There are two primary types of entries in the petty cash b. Cash book also functions as a ledger account as it has both the debit and the credit sides. 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 book in which all cash flow is recorded, including the following. There is no fixed range of what is kept for the petty.
When the petty cash tin is getting low on funds ie, the money is running out, its time to balance the fund. A cash book with cash, bank and discount column is commonly referred as. The definition of petty cash book group members power point excel conclusion p. Thus, the book is part of a manual recordkeeping system. Bookkeeping is the work of a bookkeeper or bookkeeper, who records the daytoday financial transactions of a business. Petty cash book definition of petty cash book by the free. We can maintain cashbook in excel to manage our cash and payments. Expense reports sample sample conference expense report form 20 sample thank you letter after interview fax cover sheet sample. State how double entry for the expenditure is complited in petty. 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.
This type of book is maintained just like a cash book. The book in which all cash flow is recorded, including the. In large business concerns, the petty cash book is maintained in columnar or analytical form, with a separate column for each usual item of expense and a column for total. This is a simple record of the amounts spent, topup of cash and the cash balance. Totals are carried forward from page to page until the end of the periods. You can find the questionsanswerssolutions for the chapter 4 of cbse class 11 accountancy in this page. Petty cash is a small amount of discretionary funds in the form of cash used for expenditures where it is not sensible to make any disbursement by cheque, because of the inconvenience and costs of writing, signing, and then cashing the cheque. 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.
It is to be noted that the amount of cash in the hands of the petty cashier is a part of the cash balance, therefore it should be included in the cash balance when the latter is shown in the trial balance and the balance sheet. How to set up and maintain a petty cash account basic. It may be maintained by ordinary or by the imprest system. 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. Mar, 2018 the petty cash book is a formal summarization of petty cash expenditures, sorted by date. Bookkeeping is the recording of financial transactions, and is part of the process of accounting.
Small or large companies maintain 2 types of petty cash book for all cash transactions of a business. Differences between main cash book and petty cash book 1 in. The person who maintains petty cash book is custodian while cash book is maintained by cashier. A petty cash book is generally maintained on a columnar basis a separate column being allotted for each type of expenditure. Petty cash is the small cash reserves that businesses keep on the. Petty cash book is used to record small receipts and payments, separately from regular cash book, to avoid making the work of cash book simple and less cumbersome. We explain the basics of cash book accounting here. In this book, separate columns are provided for usual head of expenditure. Recording of transactions ii petty cash book solutions. The cash book and 8 the petty cash book ethaksalawa.
For this purpose, a petty cashier is appointed by the chief cashier. Balances in the cash book are taken directly to the trial balance. Cash book is a subsidiary book which records the receipts and payment of cash. Petty cashier is appointed in addition to the head cashier. 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. As head cashier checks the accounts of previous month and gives advance for the coming month, thus, errors if any are reduced. Feel free to post a comment or email me deandotpettcashatgmaildotcom no spaces, spelled out to avoid. Dual function of the cash book cash book functions as a prime entry book as business records the receipts and payments of cash at. What are the accounting entries arising from the totals in the cashbook at the end of the day, assuming control accounts are kept. The petty cash book is a formal summarization of petty cash expenditures, sorted by date. The most common way of accounting for petty cash expenditures is to use the imprest system. Petty cash book explanation, format, example, ordinary and imprest.
Meaning of petty cash book, its importance and advantages. They have a cashbook which is both a book of prime entry as well as part of the double entry bookkeeping system. If cash book is not maintained the true position of cash can not be ascertained. Please watch the presentation below demonstrating how to transfer the voucher information into the petty cash book. With the help of cash book cash and bank balance can be checked at my point of time. Petty cash book is maintained by the petty cashier.
Separate account records are maintained for petty cash, accounts payable and receivable, and other. It follows that every business must maintain a journal books of. At any time the balance of cash as shown by the cash book must agree with the physical balance of cash in hand. 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. Step 1 of balancing the fund is the write the vouchersreceipts into the petty cash book as per task 2 on the previous page. Receipts are recorded on the debit the left hand side, and payments are recorded on the credit right hand side. Petty cashier is a person, who maintains the petty cash book. 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. Ap for short money owed by the business to another. The main advantages of petty cash book publish your article. Petty cash book can be maintained either in a simple or in analytical way. Two types of petty cash book maintained by small or.
How to make a family budget and manage the household accounts. In most cases, the petty cash book is an actual ledger book, rather than a computer record. All cash transactions are recorded in the cash book. A free powerpoint ppt presentation displayed as a flash slide show on id. Any difference may be attributed to credit transfers from customers and standing order payments not recorded in the cash book. Petty cash transactions are transactions which involve small insignificant amount of cash, hence the name petty. 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. 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. The person who maintains petty cash book is custodian while.
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. 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. Print out a petty cash form or petty cash vouchers and keep in the locked box with your petty cash. Its up to you to record what you spent and why you spent it. The person who is responsible for the recording the receipts and the payments is known as the petty cashier. Recording of transactions ii petty cash book solutions this page contains the cbse accountancy class 11 chapter recording of transactions ii notes. There are a lot of resources on internet for resume templates and examples. At the end of the day, a florist who doesnt account for petty cash purchases will simply show that the stores cash is under. These small expenditures are usually paid using coins and currency notes rather than checks. Many expenses of small nature are recorded in petty cash book. Ppt petty cash book powerpoint presentation free to view. Petty cash log receipt voucher record book tracker 8. Aug 03, 2016 petty cash book home forums ask acca tutor forums ask the tutor acca fa fia ffa petty cash book this topic has 1 reply, 2 voices, and was last updated 3 years, 8 months ago by john moffat.
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