This kind of petty cash book is known as analytical 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. 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. This excel cash book is suitable for any small business that wants an easy bookkeeping method a simple way to track your income and expenses. Petty cash book is maintained by the petty cashier. Carrying on with our accounting question blog series, this week were focusing on petty cash primarily what it is, the main procedure behind it, and how you can use clear books to record your expenditure what is petty cash. 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. In most cases, the petty cash book is an actual ledger book, rather than a computer record. A petty cash voucher is usually a small form that is used to document a disbursement payment from a petty cash fund. Petty cash book explanation, format, example, ordinary and imprest. Read this article to learn about the recording of transactions in cash book and journal. To track the cash, create a petty cash account in the asset section of your chart of accounts.
In accounting and finance, cash includes, currency notes made of paper, coins, demand deposits, money orders, checks and bank overdrafts etc. The petty cash book is a formal summarization of petty cash expenditures, sorted by date. The petty cash book will be maintained by a separate cashier known as petty cashier in the accounting field. Petty cash, in simple terms, is an amount of money that a business has available to pay for something inexpensive, so an employee doesnt have to use their own money. The petty cashier of john and james company paid cash for the following expenditures during march 2018. Recording of transactions ii petty cash book solutions this page contains the cbse accountancy class 11 chapter recording of transactions ii notes.
Petty cash book format example definition explanation. When youre ready to replenish the fund, record the expenses in your accounting software based on the petty cash expense log. Thus, the book is part of a manual recordkeeping system. A proof of cash is essentially a roll forward of each line item in a bank reconciliation from one accounting period to the next, incorporating separate columns for cash receipts and cash disbursements. The petty cash clerk also turns in a copy of his or her petty cash book to the general ledger accountant or cashier. Separate duties, so the person who is recording transactions is different from the person putting the transactions into your accounting system. Similarly, when cash is paid out the same is recorded on the credit or right hand side of the cash book.
Do occasional audits, checking to see that transactions are. Petty cash financial accounting simple book production. Petty cash balance after reimbursement reverts to back to the level of the float. Fixed amount is paid to the petty cashier along with the imprest system. 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. Format of the petty cash book free download as word doc. 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. For this purpose, a petty cashier is appointed by the chief cashier. The chief cashier is relieved from the cumbersome work of petty cash disbursement.
Cash ac and bank ac are two busiest accounts in ledger and they are removed from the ledger to reduce its volume and size. Analytical petty cash book or columnar petty cash book is different from the simple petty cash book in the sense that in this type of petty cash book, an analytical presentation of cash payment is made. Meaning of petty cash book, its importance and advantages. This is the only amount of cash that is not immediately deposited in the bank account after it is received. A petty cash book is a ledger kept with the petty cash fund to record amounts that are added to or subtracted from its balance. Petty cash is easy to steal, so make sure you protect it. Relatively small amount of cash kept at hand for making immediate payments for miscellaneous small expenses.
Petty cash definition is cash kept on hand for payment of minor items. Because a petty cash is usually open to anyone, it can always lead to an abuse. In this book, separate columns are provided for usual head of expenditure. The various columns are totalled to show the reason for making payments, and then the respective ledger accounts are debited. Recording of transaction in cash book and journal with. 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. 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. Each employee wishing to make a purchase should go through this representative, rather than leaving the. Petty cash definition of petty cash by merriamwebster. How the imprest system of petty cash book works your. Petty cash should be part of an overall business accounting system that. The columns and formula used for a proof of cash are. Cash book definition, example and format of cash book. The cash book can be maintained properly as petty transactions are maintained separately.
In most cases, the petty cash book is an actual ledger book, rather. The amount of reimbursement is equal to the expenses paid through petty cash since the time of last reimbursement. And because it is too small, no one really cares about its current status, except for the one in charge. Variation on the petty cash book is to maintain it as a spreadsheet, where each item is recorded in a specific column that is designated for a particular type of receipt or expense. You can find the questionsanswerssolutions for the chapter 4 of cbse class 11 accountancy in this page. This book records all those expenses which are small in amount and which are incurred on regular basis. There are two primary types of entries in the petty cash b.
A separate column is allotted for each type of expenditure. Petty cash book is maintained to record small expenses such as postage, stationery, telegram. Keeping some petty cash around in the office will make it quicker and easier to buy small. In the same way no bank ac is opened in ledger for recording bank transactions, rather. A cash book is a financial journal that contains all cash receipts and payments, including bank deposits and withdrawals. Just like the other type of books, it records receipts from cash and bank on the left side and payments on the right side. How to prepare petty cash bookpetty cash book in hindi. Petty cash book can be maintained either in a simple or in analytical way. A petty cash book to record small day to day cash expenditures. This format makes it easier to record petty cash activity in the general ledger. Cash payment cannot be proved if the same is not settled after taking proper shreds of evidence into the account.
There might be a petty cash drawer or box in each department for. Petty cash book definition, types, format, examples. A petty cash is a cash book used to enter all small or petty expenses obtained. A day bookcumledger kept for making entry of the cash transactions as well as posting to the cash and bank accounts is called cash book. When cash is received it is entered on the debit or left hand side. It is another cash book which is maintained, generally, in large business. Petty cash book is a formal book of recording petty expenses which are incurred in cash. Petty cash, also known as imprest cash, is a fund established for making small payments that are impractical to pay by check. Define and explain a three column cash booktreble column cash book. Youll need to nominate a petty cash manager, typically an accountant, bookkeeper or other supervisor to oversee operations and collect receipts, if necessary. 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 is a ledger book, which is used to record petty cash. The cash book is updated from original accounting source documents, and is therefore a book of prime entry and as such, can be classified as a special journal.
Every time a payment is made through petty cash, it is recorded in the petty cash register usually by the cashier. Most businesses use petty cash for this, monitoring payments in a petty cash book. Accounting for petty cash explanation, related controls. Cash includes currency and coins, although most businesses do not keep much of this type of cash around. A petty cash book is an accounting book used for recording expenses which are small and of little value. Keep the petty cash box in a secure location, known only to one or two people. Petty cash meaning, examples accounting for petty cash. Companies replenish the petty cash fund at the end of the accounting period, or sooner if it becomes low. For one, it does not require too much of an accounting. Also included as a part of cash are the balances kept at banking and financial institutions.
The petty cash book is a book of vouchers which are made each time an. Like a general cash book, a petty cash book has a debit and a credit side. 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. This format is an excellent way to monitor the current amount of petty cash remaining on hand. Petty cash is often used to pay for postage, small office supplies, and other small purchases. The number of daily petty expenses of large business organizations such as paper, ink. The reason for replenishing the fund at the end of the accounting period is that no record of the fund expenditures is in the accounts until the check is written and a journal entry is made. Petty cash is a small amount of money, but it adds up quickly as its replenished. Cash book in accounting the cash book is a chronological record of the receipts and payments transactions for a business.
Petty cash or a petty cash fund is a small amount of money available for paying small expenses without writing a check. Cash book is a book of original entry in which transactions relating only to cash receipts and payments are recorded in detail. 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. 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. The cash book is 100% free for you to download and use forever, and it is fully customizable so you can change anything in it. The advantages of petty cash system enumerated are as follows. Hence a petty cash voucher format shall be created to put evidence in the process and shall be signed by the receiver of cash at the time of. 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. One major advantage of this system is that it saves time. A petty cashier makes a detailed analysis of petty payments and records under suitable heads, i.
Petty cash book is the accounting book that is used for the purpose of recording the petty cash expenditure i. Under this system the petty cashier at first receives from the chief cashier a fixed sum of money for meeting. As the petty cashier has to account for his expenses, before he can draw further sums, the petty cash book remains up to date. In order to make the task of the cashier simple, these small and recurring expenses are recorded in a separate cash book called petty cash book and the individual who maintains the petty cash is. Cash book records all receipts of and payments in cash. Cash book, pass book, bank reconciliation statement dr. Journal in which all cash receipts and payments including bank deposits and withdrawals are recorded first, in chronological order, for posting to general ledger. Petty cash is also the title of the general ledger current asset account that reports the amount of the companys petty cash. Petty cash book is a type of cash book, which use to record small amount of receipts and payment. Format of the petty cash book bookkeeping debits and credits. 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. In larger firms, it is commonly divided into two parts.
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