In most cases, the petty cash book is an actual ledger book, rather than a computer record. Petty cash book definition of petty cash book by the. Cash book is a separate book of accounts in which all the cash transactions of the company are entered with respect to the corresponding date and it is different from the cash account where posting is done from the journal. Information and translations of petty cash in the most comprehensive dictionary definitions resource on the web. There might be a petty cash drawer or box in each department for. How the imprest system of petty cash book works your. All the transaction which is recorded in the cash book has the two sides i. For recording transactions in the simple cash book, the foremost step is to understand. Proper maintenance and its reconciliation with bank statements are crucial to a business some business concerns maintain cash book instead of cash receipt journal and. Petty cash book is maintained to record small expenses such as postage, stationery, telegram.
Petty cash is also the title of the general ledger current asset account that reports the amount of the companys petty cash. 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. Petty cash implies a small amount of cash in hand, with the petty cashier, who uses the amount to pay for petty cash expenses. When the cashier requests for reimbursement of petty cash, he creates a petty cash voucher detailing the payments made through petty cash during the.
For this purpose, a petty cashier is appointed by the firm, to pay for small payments usually below rs. Cash book definition, explanation types and advantages. Maintaining a cash book under the stated system is called an imprest petty cash book. 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. For smallscale 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. Also known as a two column cash book, a double column cash book is the one which has a bank column in addition to the regular cash column.
When cash is received it is entered on the debit or left hand side. Cash book explanations show your love for us by sharing our contents. The additional analysis columns are used to analyze expenditures as they arise. 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. The date of transaction is written in this column in two linesin the first line, the year and in the second line, the name of the month followed by the actual date.
Every time a payment is made through petty cash, it is recorded in the petty cash register usually by the cashier. A petty cash book to record small day to day cash expenditures. Just like the other type of books, it records receipts from cash and bank on the left side and payments on the right side. Definition and explanation of cash book format, advantages. Petty cash book explanation, format, example, ordinary and imprest. There are two primary types of entries in the petty cash book, which are a debit to record cash received. The petty cash book is defined as relatively small amount of cash kept at hand. Petty cash is often used to pay for postage, small office supplies, and other small purchases. 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. Petty cash funds are maintained to provide a company with fast access to small amounts of cash for minor, nonroutine purchases. All cash transactions are primarily recorded in it as soon as they take. This is the only amount of cash that is not immediately deposited in the bank account after it is. Cash book contains cash transactions passing into and out of a business.
The chief cashier is relieved from the cumbersome work of petty cash disbursement. Petty cash book explanation, format, example, ordinary and. Oct 22, 2019 cash book is a book of the original record and a part of the ledger, if all cash transactions are passed through the cash book, the labor of posting every item of receipt and payment of cash individually to each account in the ledger is avoided. 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. Mar 28, 2019 deposit cash into the petty cash fund. The cash book is regularly reconciled with the bank statements as an internal auditing measure. One major advantage of this system is that it saves time. The petty cash book is a formal summarization of petty cash expenditures, sorted by date. Simple cash book contains only one amount column on each side debit and credit for recording cash receipts and cash payments. What is a cash book definition, explanation and types. The cash book can be maintained properly as petty transactions are maintained separately. Petty cash definition of petty cash by the free dictionary.
How the imprest system of petty cash book works your business. The book in which all cash transactions either cash is received or paid are primarily recorded according to dates, is called cash book. A petty cash voucher is usually a small form that is used to document a disbursement payment from a petty cash fund. Surprise cash counts must be conducted time to time to ensure the accuracy of the cash balance stated in the petty cash register the amount of petty cash float should not be set too high since petty cash register does not form part of the double entry system, payments made through petty cash are subsequently posted into the cash ledger and the. Petty cashier is a person, who maintains the petty cash book. Petty cash is the small cash reserves that businesses keep on the. 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 book explanation, format, example, ordinary. Relatively small amount of cash kept at hand for making immediate payments for miscellaneous small expenses.
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. Totals are carried forward from page to page until the end of the periods. For example, plan to count the funds and reconcile them with the amounts in your petty cash book every time you add cash. Cash book definition, types accounting format of cash book. Petty cash book definition, types, format, examples imprest and. 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. Petty cash or a petty cash fund is a small amount of money available for paying small expenses without writing a check. Petty cash book is the accounting book that is used for the purpose of recording the petty cash expenditure i. Here we detail about the three types of cash book, i. 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. Proper usage and audio pronunciation plus ipa phonetic transcription of the word petty cash. Similarly, when cash is paid out the same is recorded on the credit or right hand side of the cash book.
Petty cash book format example definition explanation. Cash book definition, example and format of cash book. The petty cashier of john and james company paid cash for the following expenditures during march 2018. It is a ledger in which both cash receipts and cash payments are recorded. The advantages of petty cash system enumerated are as follows. 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 these are expenses which are incurred day after day. 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. Cash book is a book of original entry in which transactions relating only to cash receipts and payments are recorded in detail. A doubletwo column cash book to record cash as well as bank transactions. The credit side consists of several analysis columns. A small fund of money for incidental expenses, as in an office. Petty cash, also known as cash on hand, refers to small amounts of cash kept on hand in a business. Petty cash book is a ledger book, which is used to record petty cash.
Petty cash is a small reserve of used for transactions and expenditures where it doesnt make sense to write cheques. 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 vouchers are used to maintain financial control of petty cash accounts, preventing abuse or. 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. 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. This kind of petty cash book is known as analytical petty cash book. Petty cashier meaning in the cambridge english dictionary. Petty cash vouchers are also referred to as petty cash receipts and can be purchased from office supply stores. Cash book is the one in which all the cash receipts and cash payments including the funds that are deposited in the bank and funds which are withdrawn from the bank are recorded according to the date of the transaction. A petty cash fund is an amount of cash that a business uses to make small, miscellaneous purchases. A separate column is allotted for each type of expenditure. An example of this format, using the same information as the preceding example, is as follows. Petty cash balance after reimbursement reverts to back to the level of the float. Entries in the cash book are then posted into the general.
A small amount of cash kept on hand by a business for incidental expenses. Petty cash book maintains records of all petty payments systematically. Once you have the basics covered, you need to put money into petty cash. Fixed amount is paid to the petty cashier along with the imprest system.
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. Petty cash is a small amount of cash that is kept on the company premises to pay for minor cash needs. Importance and advantages of petty cash book business performing a large number of petty transactions usually maintain a separate petty cash book. Its also vital to ensure that you have a sturdy and lockable petty cash box where you keep all the money safe. Petty cash is stored in a petty cash drawer or box near where it is most needed. A cash book is a financial journal that contains all cash receipts and payments, including bank deposits and withdrawals. Thus, the book is part of a manual recordkeeping system. These are expenses which are incurred day after day. General cash book is subdivided in the single column, double column, and treble column cash book. Petty cash book can be expressed as a formal summarization of the petty cash expenditures which refers to the daytoday normal. The following points highlight the importance and advantages of petty cash book which can be taken as its objectives as well. 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. Petty cash transaction a petty cash transaction is one in which an employee or business owner takes money out of the petty cash fund for.
Accounting for petty cash explanation, related controls. It is both a book of original entry as well as a book of final entry. 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 check amount should be sufficient to handle most cash purchases for the time period you choose, but not so large as to encourage theft. A triplethree column cash book to record cash, bank and purchase discount and sales discount. Regularly checking the petty cash book is balanced when the money in the fund is low, they have to request that cash be withdrawn from the bank in order to replenish the money that has been paid out. It is another cash book which is maintained, generally, in large. Columnar petty cash book and its preparation process.
Cash that a company keeps available for small transactions with customers. For this purpose, a petty cashier is appointed by the chief cashier. A petty cash book is generally maintained on a columnar basis a separate column being allotted for each type of expenditure. A record of expenditure from a petty cash fund for which a receipt was not received. Examples of these payments are office supplies, cards, flowers, and so forth. Petty cash book definition, types, format, examples. Jul 16, 2019 petty cash, also known as cash on hand, refers to small amounts of cash kept on hand in a business. The most common way of accounting for petty cash expenditures is to use the imprest system. Definition of petty cash voucher a petty cash voucher is usually a small form that is used to document a disbursement payment from a petty cash fund. You should write a check to the custodian to initially establish the fund. The amount of petty cash will vary by company and may be in the range of.
Petty cash book is a ledger book, which is used to record petty cash expenses formally in chronological order, with the date. Meaning of petty cash book, its importance and advantages. 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. Apr 26, 2020 the petty cash book is a formal summarization of petty cash expenditures, sorted by date. Petty cash transaction 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. To pay for small purchases which require cash, such as food for the office lunch or coffee supplies, or for parking. 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 book. Accounting for petty cash explanation, related controls and.
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