A cash book is set up as a subsidiary to the general ledger in which all cash transactions made during an accounting period are recorded in chronological order. The primary goal of a cash book is to manage cash efficiently, making it easy to determine cash balances at any point in time, allowing managers and company accountants to budget their cash effectively. It is also much faster to access cash information in a cash book than by following the cash through a ledger. Analytical petty cash bookAn analytical petty cash book is one which there is one amount column on its debit side and a number of amount columns on its credit side for different heads of expenses.

5th/03/18 bought some tea leaves $30, pens $15 and postage stamps $10. Petty cashbook has two main sides, namely Debit Side abbreviated as DR and Credit Side abbreviated CR. 3.High chances of cash misuse especially if the few cashiers collude due to lack of separation of duties. 4.Easy to coordinate small cash activities-that is any receipt of cash and how it is spend is straight forward. In some cases, the amount of expenditure is so small that issuing a cheque for it is quite inconvenient and unnecessary. Our mission is to empower readers with the most factual and reliable financial information possible to help them make informed decisions for their individual needs.

Example for the Analytical Type Petty Cash Book

To establish the petty cash an amount called cash float is disbursted to the petty cashier in the beginning of a month, the cash floor is credited to the main cash book while the petty cash book is debited. The benefit of an analytical petty cash log is that it explains each transaction, giving you more depth than the simple petty cash book. And because each payment is categorised, you can get an idea not just of spend, but of spend distribution. The debit section is a single column where you list cash received by the petty cashier.

From the following transactions in the month of   March 2018, prepare a petty cash book for Our Co. ltd considering the two scenarios of an ordinary petty cash system and imprest petty cash system. 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. Particulars of cash receipts and expenses are written together in a single column known as particulars column and another column is used for writing dates of both debit and credit. Petty expenses are recorded in petty cash book in chronological order of dates instead of the cash book. The employee, who keeps the petty cash book, is called petty cashier. A somewhat more useful format is to record all debits and credits in a single column, with a running cash balance in the column furthest to the right, as shown in the following example.

Format of petty cash book

Journal entry posted in the Cartage account on the debit side by writing “To Petty Cash A/c”. Journal entry posted in the Stationery account on the debit side by writing “To Petty Cash A/c”. 1.The imprest system is an arrangement which brings down the probability of misuse of cash. For instance, the float can be immediately reduced if it is found to be more than enough for the agreed period.

Always the voucher would show the amount,

purpose, recipient, general ledger account number and date relating to the expenses. If person receiving the petty cash and the person giving out the petty

cash would sign the voucher and any supporting certification (such as revenue) would be involved. So for making payment of petty expenses a petty cash fund is created as an alternative to the issue of cheques from where cash payment is made. Operating petty cash funds is very often termed as an imprest system. At the end of a period totals of all heads of petty expenses are transferred to a relevant ledger account. 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.

Making payments from funds

Petty Cash fund reduces for every petty cash receipt kept in the petty cash box. Petty cashier encashes the cheque and keeps this money in a box under lock and key termed as a petty cash box. As per the principle of cash payment, all payments are to be made by cheque. In the case of payment of petty cash, this basic principle of payment by cheque is not followed. Under this system, it is almost impossible on the part of the petty cashier to misappropriate the fund because the head cashier does have full control over the petty cashier.

A simple petty cash book is one which there is only one amount column on its both sides with common date and particular columns. Enter the following transaction into a petty cash book with these headings. Postage free competitive analysis templates and stationery, travelling expenses, carriage, office expenses. Enter the following into the petty cash book showing the analysis column for postage, travelling expenses, stationery, carriage and sundry expenses.

Topic 6 petty cash book

This is less a type of book and more a method of funding your petty cash transactions. An imprest is a fixed sum of money that’s allocated for a specific period. Of course, the more detail you record, the more accurate a picture you’ll get of your finances, but it also means more time spent on admin.