It is called analytical cash book because it analyses the expenses into a number of grouped expenses. The petty cash book is a recordation of petty cash expenditures, sorted by date. A petty cash book is generally maintained on a columnar basis a separate column being allotted for each type of expenditure. At the beginning of an accounting period, there should be a certain amount of cash in the box and no vouchers which should have been removed as part of the monthend entry for the preceding month. 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. The voucher is typically purchased from an office supply store. Imprest system of petty cash fund the world impress means advance amount which is personal to certain person to make petty expenses. The simple petty cash book has only two amount columns. Most companies set up a special fund called a petty cash fund for small purchases and office expenditures. A petty cashier makes a detailed analysis of petty payments and records under suitable heads, i. In this book, separate columns are provided for usual head of expenditure.
The simplest way to do this is to write a check to petty cash using. A petty cash fund is established by transferring a specified amount of cash from the general checking account to a person who is given custodial responsibility for the fund. Cash book definition, example and format of cash book. Some petty cash vouchers are prenumbered and sometimes a number is assigned for reference and control. The entries related to receipt and payment of cash are first recorded in the cash book and then posted to the relevant ledger accounts. An imprest system is a method to account for petty cash by maintaining a balance in a fund that equals petty cash receipts plus additional cash in the fund. Initials of the person disbursing the money from the petty cash fund. Definition of petty cash petty cash refers to a small amount of currency and coins that a company uses to pay small amounts without writing a check. The receipt column is used to record the opening balance and the amount received from the head cashier. 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. It works as a book of original entry as well as a ledger account. With the first initial payment to petty cash, the custodian should start a log of the transactions that go through the petty cash box.
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. Petty cash definition of petty cash by the free dictionary. Establishing a petty cash fund allows a business owner to maintain control and account for the expenditures with minimal cost and administrative hassle. But, in every business a number of petty small payment like that for postage, carriage, stationery, entertainment, cartage, conveyance etc. This kind of petty cash book is known as analytical petty cash book. Petty cash book is a formal book of recording petty expenses which are incurred in cash. Petty cash book definition, types, format, examples. Petty cash refers to a small amount of currency and coins that a company uses to pay small amounts without writing a check. Review your petty cash register before you replenish the petty cash fund. It is a system of petty cash book where a person is given a fixed amount in the beginning of the period, the petty cashier submits the. All cash transactions are primarily recorded in it as soon as they take. Petty cash book is maintained by the petty cashier. Purchases made with petty cash for the month of may. Businesses generally keep small amounts of cash to meet small miscellaneous payments such as entertainment expenses and stationery costs.
Petty cash book explanation, format, example, ordinary and. For posting of items of petty cash book, all heads of petty cash book are totaled periodically, say monthly. A petty cash book can either be a simple petty cash book or an analytical petty cash book. Under the expenditure, we understand small payments that you cant make with a credit card or use a check. Jan 24, 2019 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. Apr 26, 2020 the petty cash book is a useful control over petty cash expenditures, since it forces the petty cash clerk to formally record all cash inflows and cash outflows. Thus, the book is part of a manual recordkeeping system. 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. A triplethree column cash book to record cash, bank and purchase discount and sales discount. To set up and maintain a petty cash fund, you must fund it with monies from your business. Require that employees maintain a running petty cash log for every transaction, including receipts.
The petty cash book will be maintained by a separate cashier known as petty cashier in the accounting field. Apr 26, 2020 the petty cash voucher is an important form of evidence for reconciling the remaining cash in the petty cash box. 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 definition 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 concern. This is the maximum amount of cash that can be held at any time. These are expenses which are incurred day after day.
The cash book, though it serves the purpose of a cash book of original entry viz. Each entry in the petty cash book should include the date, the amount, and what was purchased with the petty cash. When the petty cash fund is replenished, the completed petty cash vouchers provide the documentation for the. 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. Definition and explanation of cash book format, advantages. A petty cash voucher is a standard form used as a receipt whenever cash is withdrawn from a petty cash box.
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. To pay for small purchases which require cash, such as food for the office lunch or coffee supplies, or for parking. The petty cashier of john and james company paid cash for the following expenditures during march 2018. 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. This money is to cater for minor expenditures hospitality, minor stationery, casual postage, and so on and is reimbursed periodically on satisfactory explanation of how it was spent. Petty cash book format example definition explanation. When cash is received it is entered on the debit or left hand side.
Then, total of individual heads of the petty cash book are posted to the debit side of respective ledger account by writing the words to petty cash ac. Cash that a company keeps available for small transactions with customers. Petty cash book the cash book as seen above is used for recording all major payments. This can be a simple hand written accounting log or an online spread sheet kept up with by the custodian. The cash book is used to record receipts and payments of cash. Accounting for petty cash explanation, related controls and. Required c i state the amount of cash there should have been in the petty cash box. These small expenditures are usually paid using coins and currency notes rather than checks.
If youre ready to upgrade from a petty cash box and manually tracking petty cash purchases with petty cash logs and excel spreadsheets, business credit cards are a great alternative. Keeping petty cash on hand for small purchases, however, allows employees to go around. Petty cash book can be maintained either in a simple or in analytical way. A petty cash voucher is usually a small form that is used to document a disbursement payment from a petty cash fund. Each transaction recorded in the books of accounts goes through the journal, ledger. It is recorded in a separated chart account which enables to reconcile daily between accounting record and logbook. Petty cash book is the cash book which involves small cash payment and receipt during daily business operation. And the payment column of a simple petty cash book records petty expenses. Petty cash book is a type of cash book that is used to record minor regular expenditures such as. There might be a petty cash drawer or box in each department for. Petty cash book meaning, cash book vs petty cash book. Petty cash book is a ledger book, which is used to record petty cash expenses formally in chronological order, with the date.
Petty cash is a system that funds and tracks small purchases such as parking meter fees that arent suitable for check or credit card payments. This money is to cater for minor expenditures hospitality, minor stationery, casual postage, and so on and is reimbursed periodically on satisfactory explanation of. A cash book is a financial journal that contains all cash receipts and payments, including bank deposits and withdrawals. In most cases, the petty cash book is an actual ledger book, rather than a computer record.
Recording of transactions ii petty cash book solutions. Oct 14, 2017 a petty cash fund is generally kept so that employees of a business can make small purchases without having to requisition money, use a company credit or debit card, or have a check cut. Cash book is a book of original entry in which transactions relating only to cash receipts and payments are recorded in detail. It is a physically small form, since it must fit within the petty cash box or drawer. Petty cash vouchers are also referred to as petty cash receipts and can be purchased from office supply stores. Petty cash book definition of petty cash book by the free.
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. Therefore, at all times one can check how much should be left in the petty cash float by deducting the amount spent from the opening petty cash. The size of the fund depends on the firms needs but should be large enough to last at least three to four weeks. A cash book is a financial journal in which cash receipts and payments including bank deposits and withdrawals are recorded first in a chronological order ie recorded according to the date of transaction. Definition and explanation of cash book with examples. A separate column is allotted for each type of expenditure. Recording of transactions ii petty cash book solutions this page contains the cbse accountancy class 11 chapter recording of transactions ii notes. Petty cash means the small amount that is allocated for the purpose of paying the small expenses which the company occurs in its day to day operations where it is unreasonable to issue the check and for managing the same custodians are appointed by the company. A doubletwo column cash book to record cash as well as bank transactions. Petty cash definition, explanation and journal entries. What is a cash book definition, explanation and types.
Petty cash book definition petty cash book is maintained to record small expenses such as postage, stationery, telegram. Similarly, when cash is paid out the same is recorded on the credit or right hand side of the cash book. Receipts or other documentation justifying the disbursement should be attached to the petty cash voucher. Format of analytical petty cash book 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. So, the book, wherein day to day petty expenses for a particular period of a business concern, are recorded in chronological order of dates is called petty cash.
Petty cash balance after reimbursement reverts to back to the level of the float. How to do petty cash accounting with business credit cards. Petty cash book definition, types, format, examples imprest and. Oct 22, 2016 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.
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. A small fund of money for incidental expenses, as in an office. The amount of petty cash also known as the petty cash fund varies by company or organization. Sep 26, 2019 the book in which those small payments are recorded, which are not convenient to record in main cash book, is called petty cash book. A brief petty cash book explanation welcome an effective accounting tool that will help you keep track of your cash expenditure. Jul 16, 2019 petty cash, also known as cash on hand, refers to small amounts of cash kept on hand in a business. The petty cash book is to enter how the cash available for daily expenses are spent for example milk, tea, taxi charges and. Withdrawals made to the petty cash fund will be recorded as expenses.
You can find the questionsanswerssolutions for the chapter 4 of cbse class 11 accountancy in this page. The most common way of accounting for petty cash expenditures is to use the imprest system. X research source if you follow a few steps, it is possible to set up and manage a petty cash account with ease. Petty cash book is maintained to record small expenses such as postage, stationery, telegram. This type of cash book usually uses the imprest system. The credit side consists of several analysis columns. Cash book explanations show your love for us by sharing our contents.
This book records all those expenses which are small. For this purpose, a petty cashier is appointed by the chief cashier. A petty cash is a cash book used to enter all small or petty expenses obtained. When the cashier requests for reimbursement of petty cash, he creates a petty cash voucher detailing the payments made through petty cash during the. 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 sum of money so kept in hand generally termed as petty cash and book in which the petty cash expenditures are recorded is termed as petty cash book. Petty cash book template excel software accountant. It is both a book of original entry as well as a book of final entry. The journal entry that needs to be recorded is a debit increase to the appropriate expense accounts and a credit decrease to petty cash. One person is designated as the petty cash custodian. These types of transactions require more time and paperwork to complete.
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. An analytical petty cash book, on the other hand, is a cashbook which contains only one amount column on the receipt side and a number of different columns on the payment side for the head of expenses. In large business houses, the cashier has to handle every day a large number of receipts and payments and if in addition to this he is further saddled with petty cash payments, his position becomes embarrassing. The book in which all cash transactions either cash is received or paid are primarily recorded according to dates, is called cash book. Introductory statement all established petty cash funds or change funds are the property of bowling green state university and are subject to handling and accounting policies established by the university. There are two types of cashbooks, and they are the 2column cash book and the 3column cashbook. Write petty cash on the pay to the order of line of the check. Place the current date on the date line of the check. Dec 24, 2019 a petty cash fund is a small fund whose purpose is to make small disbursements of cash. Petty cash financial accounting simple book production. Many businesses keep a petty cash fund to pay for small daily business expenditures such as office supplies. Petty cashier is a person, who maintains the petty cash book. The amount received by the petty cashier for assembly petty expenses and the opening balance of petty cash will be recorded in this column. In most companies, there are many occasions in which a small amount of cash must be spent on short notice.
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. Importance and advantages of petty cash book business performing a large number of petty transactions usually maintain a separate petty cash book. Most petty cash books are maintained by listing receipts. Meaning of petty cash book, its importance and advantages.
Its a cash book used to enter daily petty expenses like cost of stationery, postage and xerox copy and so on. Petty cash meaning, examples accounting for petty cash. Entries in the cash book are then posted into the general. Apr 19, 2017 the replenishment is credited to the primary cash account, usually a bank account dr petty cash ac, cr bank ac and the debits will go to the respective expense accounts, based on the petty. Explanation of columns in the analytical petty cash book. Accounting for petty cash explanation, related controls. Petty cash book is a type of cash book that is used to record minor regular expenditures such as office teas, bus fares, fuel, stay safe and healthy.
Explanation generally, in all business houses, payments are made by cheque for battery control over cash. Petty cash book definition of petty cash book by the. 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. At times, every business finds it convenient to have small amounts of cash available for immediate payment of items such as delivery charges, postage stamps, taxi fares, supper money for employees working overtime, and other small items. Write out the dollar amount in words on the appropriate line of the check. A petty cash book to record small day to day cash expenditures.
It is another cash book which is maintained, generally, in large business. Every time a payment is made through petty cash, it is recorded in the petty cash register usually by the cashier. The voucher would show the date, amount, recipient, purpose and general ledger account. 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. Please practice handwashing and social distancing, and check out our resources for adapting to these times. Journal entry to record withdrawals to petty cash fund.
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