Petty cash book is maintained to record small expenses such as postage, stationery, telegram. These are expenses which are incurred day after day. Petty cash book is maintained by the petty cashier. Petty cash is commonly associated with storefronttype businesses who deal with clients who may pay in cash. Petty cash vouchers are also referred to as petty cash receipts and can be purchased from office supply stores the petty cash voucher should provide space for the following.
There might be a petty cash drawer or box in each department for. The information in your petty cash book is part of a larger accounting system that explains your companys financial activity for tax purposes and also distills. While recording the transactions in petty cash book if all the expenses are analyzed and entries are recorded in cash book on the basis of this. As the petty cashier cannot draw as and when he likes, it prevents unnecessary accumulation of cash in his hand thus the chances of defalcation of cash are minimised. The amount of petty cash also known as the petty cash fund varies by company or organization. Meaning, pronunciation, translations and examples log in dictionary. While the triple column cash book consists of cash, bank, and discount column. A petty cash supply allows such business to more easily make change for large denominations of currency. Petty cash meaning, examples accounting for petty cash. A petty cash book is generally maintained on a columnar basis a separate column being allotted for each type of expenditure.
Jul 16, 2019 the most important part of a petty cash system is the documentation of each transaction. Petty cash is also the title of the general ledger current asset account that reports the amount of the companys petty cash. Thus we see that a cash book is the mixture of journal and ledger. A single column cash book consists of only cash column. There are two primary types of entries in the petty cash b. Are you thinking about a petty cash book but have no idea how to use it. Entries in the cash book are then posted into the general. A petty cash fund will undergo periodic reconciliations, with transactions also recorded on the financial statements. Cash book is a book of original entry in which transactions relating only to cash receipts and payments are recorded in detail. Petty cash definition and meaning collins english dictionary. 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. Petty cash is money that is kept in the office of a company, for making small payments. The petty cash book is a formal summarization of petty cash expenditures, sorted by date. In larger firms, it is commonly divided into two parts.
At the end of a period totals of all heads of petty expenses are transferred to a relevant ledger account. 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. The most important part of a petty cash system is the documentation of each transaction. Petty cash accounting involves establishing a petty cash policy, setting up a petty cash log, creating journal entries, and reconciling the petty cash account. Cash is a current asset which consists of items used in day to day financial transactions as medium of exchange. The primary bookkeeping record in singleentry bookkeeping is the cash book, which is similar to a checking account register in uk. What is a cash book definition, explanation and types. 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 book definition of petty cash book by the. When cash is received it is entered on the debit or left hand side.
Petty cash book can be maintained either in a simple or in analytical way. A petty cash transaction is one in which an employee or business owner takes money out of the petty cash fund for the purpose of buying something for the business. Discuss the causes for difference between the balances of pass book and cash book. Keeping some petty cash around in the office will make it quicker and easier to buy small things that dont hurt your business. The size of the fund depends on the firms needs but should be large enough to last at least three to four weeks. Petty cash book is a type of cash book that is used to record minor regular. Petty cash book is a type of cash book that is used to record minor regular expenditures such as office teas, bus fares, fuel. Require that employees maintain a running petty cash log for every transaction, including receipts.
In accounting and finance, cash includes, currency notes made of paper, coins, demand deposits, money orders, checks and bank overdrafts etc. Petty cash is money that is kept in the office of a company, for making small payments in cash when necessary. A cash book is a financial journal that contains all cash receipts and payments, including bank deposits and withdrawals. What is difference between main cash book and petty cash book. Cash book definition, example and format of cash book.
The petty cash voucher should provide space for the. Definition of petty cash petty cash or a petty cash fund is a small amount of money available for paying small expenses without writing a check. A petty cash book is a record of smallvalue purchases before they are later transferred to the ledger and final accounts. Definition, explanation, and example of petty cash book. Do not worry, this post here seeks to explain to you how to use petty cash books, what one may need them for, and why they are quite useful when one needs to plan a budget.
Uses of petty cash book its a cash book used to enter daily petty expenses. However, failing to hold employees accountable for petty cash may encourage theft or inappropriate use of company resources. There are numerous small payments on account of expenses like stationery, cartage, coolie hire, refreshments to guests etc. Petty cash vouchers are also referred to as petty cash receipts and can be purchased from office supply stores. General cash book is subdivided in the single column, double column, and treble column cash book. A petty cash fund is a small amount of cash kept on hand to pay for minor expenses, such as office supplies or reimbursements. Petty cash definition of petty cash by merriamwebster.
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. This type of cash book usually uses the imprest system. 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. A petty cashier receives a fixed amount of money from the head cashier with which he meets petty expenses of a certain period and records in chronological order of dates in the petty cash book. In most cases, the petty cash book is an actual ledger book, rather than a computer record. Petty cash is often used to pay for postage, small office supplies, and other small purchases. Cash that a company keeps available for small transactions with customers. Time wastage minimization under this columnar imprest petty cash book petty expenses are not needed to be posted in the relevant ledger account again and again. Petty cash book explanation, format, example, ordinary and imprest.
A petty cash fund is a small fund whose purpose is to make small disbursements of cash. Thus, the book is part of a manual recordkeeping system. Some organizations also maintain a petty cash book which records the petty or small cash expenses of. 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. The additional analysis columns are used to analyze expenditures as they arise. A petty cash book is a book of vouchers which are prepared each time a disbursement is made from petty cash. Most companies set up a special fund called a petty cash fund for small purchases and office expenditures. Mar, 2018 the petty cash book is a formal summarization of petty cash expenditures, sorted by date. Dec 20, 2007 a petty cash book is a book of vouchers which are prepared each time a disbursement is made from petty cash.
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. 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. Journal in which all cash receipts and payments including bank deposits and withdrawals are recorded first, in chronological order, for posting to general ledger. 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. Before talking about the cash book, we would briefly explain what is cash. Definition, explanation, format and system of petty cash. It is another cash book which is maintained, generally, in large business. Petty cash refers to a small amount of currency and coins that a company uses to pay small amounts without writing a check. Petty cash definition of petty cash by the free dictionary. 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.
Petty cash definition, explanation and journal entries. Practically, the cash book is substitute for cash account in the ledger. A petty cash voucher is usually a small form that is used to document a disbursement payment from a petty cash fund. These small expenditures are usually paid using coins and currency notes rather than checks. 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. 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. Receipts are recorded on the debit the left hand side, and payments are recorded on the credit right hand side. The number of daily petty expenses of large business organizations such as paper, ink. Cash book the cash book is a ledger in the sense that it is designed in the form of a cash account and records cash receipts on the debit side and cash payments on the credit side.
This is the only amount of cash that is not immediately deposited in the bank account after it is received. Definition and explanation of cash book format, advantages. Companies normally use checks to pay their obligations because checks provide a record of each payment, but they also maintain a petty cash fund to pay for. Petty cash book format example definition explanation. 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. A cash book is a special journal which is used for recording all cash receipts and all cash payments. 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. In big business firms, all payments are made by cheques and all receipts are banked. The employee, who keeps the petty cash book, is called petty cashier.
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. As the petty cashier has to account for his expenses, before he can draw further sums, the petty cash book remains up to date. A double column cash book consists of cash and bank column. The voucher would show the date, amount, recipient, purpose and.
Petty cash book is a ledger book, which is used to record petty cash expenses formally in chronological order, with the date. Totals are carried forward from page to page until the end of the periods. Petty cash is a small amount of cash that is kept on the company premises to pay for minor cash needs. Petty cash definition is cash kept on hand for payment of minor items. There might be a petty cash fund, which can be a drawer or box. The voucher would show the date, amount, recipient, purpose and general ledger account. Explain the meaning of cash book, pass book, and petty cash book.
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. For this purpose, a petty cashier is appointed by the chief cashier. Meaning of petty cash book, its importance and advantages. Petty cash may also be used for small ad hoc costs that arise e. Relatively small amount of cash kept at hand for making immediate payments for miscellaneous small expenses. Explain the meaning, need and importance of bank reconciliation statement. Petty cash is the small amount of cash that is kept on hand by a company to pay for minor, inexpensive purchases during the normal course of operations. 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. Documenting transactions is the way a business documents business expenses for tax purposes. When an individual takes money out of the petty cash fund, he notes it in the petty cash ledger. A small fund of money for incidental expenses, as in an office. A petty cash book is one in which all petty or small payments made through petty cash fund are recorded systematically. Petty cash book definition, types, format, examples imprest and. Similarly, when cash is paid out the same is recorded on the credit or right hand side of the cash book.
By keeping track of all petty cash transactions no matter how petty you have records to back up deductions for those small business expenses. Dec 24, 2019 a petty cash fund is a small fund whose purpose is to make small disbursements of cash. A petty cash fund is a small amount of cash kept on hand to pay for minor expenses, such as office supplies or. All cash transactions are first entered in the cash. The most common way of accounting for petty cash expenditures is to use the imprest system. Cash book contains cash transactions passing into and out of a business. After having her expense claims overruled, she took the money from petty cash. Petty cash meaning in the cambridge english dictionary.